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1.
If Wilma's Widgets, Inc., earns $5 million after taxes and makes $10 million in sales, what is its net profit margin?
50 percent. Net profit margin is earnings after taxes divided by sales. In the case of Wilma's Widgets, Inc., that amounts to 0.5, or 50 percent.
2.
You will find a company's audited financial statements in its ________.
Annual report. The annual report contains audited confirmations of its financial statements.
3.
Taxes are among the expenditures on an income statement.
True. Taxes are subtracted from income.
4.
If a company with a beta of 3.0 is expected to get a return of 15 percent, what can we expect the return of the overall market to be?
5 percent. A beta of three indicates three times the earnings possibility of the overall market. Thus, the overall market's return would be only one-third that of our company.
5.
A company's book value is _______.
The value of its assets minus liabilites. Book value is the value of a company's assets.
6.
Low earnings can make a price/earnings ratio very high. This fact may not mean that the company is overvalued. Instead, there may simply be an industrywide ________.
Recession. A recession may lower earnings.
7.
A high inventory turnover ratio indicates that _______.
A company is managing its inventory efficiently. It is a measure of a company's success with inventory.