Financial Management - Study Mode

[#271] Low price for earning ratio is result of
Correct Answer

(A) low risky firms

Explanation

Solution: Low price for earning ratio is result of low risky firms. The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share price to the company's earnings per share.

[#272] Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be
Correct Answer

(A) 26.73%

Explanation

Solution: Return on Equity (ROE) = Net Profit Margin x Asset Turnover Ratio x Equity Multiplier. = 4.5% x 2.2 x 2.7 = 26.73%

[#273] Formula such as net income available for common stockholders divided by total assets is used to calculate
Correct Answer

(A) return on total assets

Explanation

Solution: Formula such as net income available for common stockholders divided by total assets is used to calculate return on total assets. The ratio is considered to be an indicator of how effectively a company is using its assets to generate earnings.

[#274] Price per ratio is divided by cash flow per share ratio which is used for calculating
Correct Answer

(D) price to cash flow ratio

Explanation

Solution: Price per ratio is divided by cash flow per share ratio which is used for calculating price to cash flow ratio. The price-to-cash flow (P/CF) ratio is a stock valuation indicator or multiple that measures the value of a stock's price relative to its operating cash flow per share.

[#275] A techniques uses to identify financial statements trends are included
Correct Answer

(D) Both A and B

Explanation

Solution: A techniques uses to identify financial statements trends are included in common size analysis and percent change analysis.