Learning Objective 8-7
1) PDG Corporation had a return on equity of 18%. Beginning and ending shareholders’ equity for the corporation were $570,000 and $560,000 respectively. There were 350,000 common shares and no preferred shares outstanding. What was net income for the year?
A) $101,700
B) $63,000
C) $3,138,888.89
D) $1,944,444.44
2) Team Shirts had a return on equity of 23%. Average shareholders’ equity for the corporation was $123,000. There were 45,000 common shares and no preferred shares outstanding. What was net income for the year?
A) $28,290
B) $10,350
C) $534,782.61
D) $195,652.17
3) Use the following information for Equitable, Inc. to answer the following question(s). Equitable issued no new common stock and had 100,000 common shares issued and outstanding during 2011. Equitable has no preferred stock.
Net income for the year ended, December 31, 2011
|
$370,000
|
Retained earnings, December 31, 2010
|
$280,000
|
Retained earnings, December 31, 2011
|
$360,000
|
Total shareholders’ equity at December 31, 2011
|
$725,000
|
Total liabilities at December 31, 2010
|
$105,000
|
Total liabilities at December 31, 2011
|
$385,000
|
Total assets at December 31, 2010
|
$750,000
|
What was return on equity for the year ended December 31, 2011?
A) 54.0%
B) 51.0%
C) 102.8%
D) 20.0%
4) Use the following information for Equitable, Inc. to answer the following question(s). Equitable issued no new common stock and had 100,000 common shares issued and outstanding during 2011. Equitable has no preferred stock.
Net income for the year ended, December 31, 2011
|
$370,000
|
Retained earnings, December 31, 2010
|
$280,000
|
Retained earnings, December 31, 2011
|
$360,000
|
Total shareholders’ equity at December 31, 2011
|
$725,000
|
Total liabilities at December 31, 2010
|
$105,000
|
Total liabilities at December 31, 2011
|
$385,000
|
Total assets at December 31, 2010
|
$750,000
|
What was earnings per share for the year ended December 31, 2011?
A) $370,000
B) $0.51
C) $3.70
D) $7.50
5) Net income divided by average common shareholders’ equity is the ________.
A) return on equity
B) earnings per share
C) market value per share
D) profit margin
6) Net income minus preferred dividends, divided by the weighted average number of common shares outstanding is the ________.
A) return on equity
B) earnings per share
C) market value per share
D) profit margin.
7) Return on equity is ________.
A) net income divided by average shareholders’ equity
B) total shareholders’ equity divided by the average number of outstanding common shares
C) net income divided by the average number of common shares outstanding
D) net income divided by sales
8) Earnings per share is ________.
A) net income, minus preferred dividends, divided by average shareholders’ equity
B) total shareholders’ equity divided by the weighted average number of outstanding common shares
C) net income, minus preferred dividends, divided by the weighted average number of common shares outstanding
D) net income divided by sales
9) The most widely-used indicator of a company’s overall performance is________.
A) return on equity
B) earnings per share
C) sales
D) profit margin
10) A measure of how well a company produces income with the amount of investment that common shareholders have made in the company is the ________.
A) return on equity
B) earnings per share
C) operating income
D) profit margin