Which of the following equations least accurately represents return on equity?
A. (net profit margin)(equity turnover).
B. (net profit margin)(total asset turnover)(assets I equity).
C. (ROA)(interest burden)(tax retention rate).
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An analyst who needs m model and forecast a companys earnings for the next three years would be least likely to:
Assume that key financial ratios will remain unchanged for the forecast period.
B. Use common-size financial statements to estimate expenses as a percentage of net income.
C. Examine the variability of the predicted outcomes by performing a sensitivity or scenario analysis.
Sale of obsolete equipment would be classified as:
A. Operating cash flow.
B. Investing cash flow.
C. Financing cash flow.
Which of the following transactions affects owners equity but does not affect net income?
A. Foreign currency translation gain.
B. Repaying the face amount on a bond issued at par.
C. Dividends received from available-for-sale securities.
Which of the following is most likely for a firm with high inventory turnover and lower sales growth than the industry average? The firm:
A. Is managing its inventory effectively.
B. May have obsolete inventory that requires a write-down.
C. May be losing sales by not carrying enough inventory.