Q2: Multiple choices

Answer the following, by circling the alternative that best answers the associated question. ( show your calculation)

1) A firm with sales of $1,000,000, net profits after taxes of $30,000, total assets of $1,500,000, and total liabilities of $750,000 has a return on equity of

A) 20 percent.

B) 15 percent.

C) 3 percent.

D) 4 percent.

2) Candy Corporation had pretax profits of $1.2 million, an average tax rate of 34% and it paid preferred stock dividends of $50,000. There were 100,000 shares outstanding and no interest expense. What were candy Corporations earnings per share?

A) $3.91

B) $ 4.52

C) $ 7.42

3) A firm had yearend 2004 and 2005 retained earnings balances of $670,000 and $560,000, respectively. The firm reported net profits after taxes of $100,000 in 2005. The firm paid dividends in 2005 of ________.

A) $10,000

B) $100,000

C) $210,000

4) A corporation had a year-end 2004 retained earnings balance of $220,000. The firm reported net profits after taxes of $50,000 in 2005 and paid dividends in 2005 of $30,000. The firm's retained earnings balance at year-end 2005 was ________.

A) $240,000

B) $250,000

C) $270,000