114) Indicate which of the following analytical tools is described in each situation below. Each ratio is used only once.
a.debt-to-equity ratio
b.return on assets ratio
c.return on equity ratio
d.gross profit ratio
_____1.A small downward shift in this ratio is causing concern for the management of Axon Corporation.
_____2.Bonuses for the division managers of Cotton Works are based on how much profit is earned by each division on the assets assigned to it.
_____3.Sara is trying to determine whether Team Shirts is making enough profit to satisfy investors.
_____4.First Bank is considering a loan application from Team Shirts for $5,000 and wants to determine whether Team Shirts will have too much debt.
115) Indicate which of the following analytical tools should be used in each situation. Each ratio is used only once.
a.price/earnings ratio
b.dividend yield ratio
c.return on assets ratio
d.return on equity ratio
e.gross profit ratio
_____1.An upward shift in this ratio helped managers to earn bonuses for the quarter.
_____2.Donna Squires, a retired teacher, is looking for stock in companies which will pay her high dividends on her investment.
_____3.Block Investors Group is reviewing its investment in Team Shirts. The members of the group are concerned about the amount of income earned on the assets invested in Team Shirts.
_____4.Ana Gutierrez is researching the market's opinion about the future earnings of companies as a way of finding bargain stocks.
_____5.Larry Hines is concerned that XYZ Company is producing less income based on shareholders' equity than the industry average.