Question

1. Refer to the following selected financial information from Gomez Electronics. Compute the company’s return on total assets for Year 2.

	Year 2			Year 1
Net sales	$	487,000		$	427,950
Cost of goods sold		278,000			251,820
Interest expense		11,400			12,400
Net income before tax		68,950			54,380
Net income after tax		47,750			41,600
Total assets		320,500			298,200
Total liabilities		172,900			169,000
Total equity		147,600			129,200

Multiple Choice

• 14.9%.

• 9.8%.

• 15.4%.

• 2.8%.

• 22.3%.

2. A company has net income of $950,000; its weighted-average common shares outstanding are 190,000. Its dividend per share is $0.95, its market price per share is $98, and its book value per share is $91.00. Its price-earnings ratio equals:

Multiple Choice

• 18.20.

• 6.05.

• 19.60.

• 7.00.

• 7.95.

3. A company paid $0.74 in cash dividends per share. Its earnings per share is $4.46 and its market price per share is $26.75. Its dividend yield equals:

Multiple Choice

• 16.59%.

• 2.77%.

• 6.03%.

• 3.61%.

• 16.67%.

Answer 1