An analyst is evaluating two companies, A and B. Company A has a debt ratio of 50% and
Company B has a debt ratio of 25%. In his report, the analyst is concerned about Company B's debt
level, but not about Company A's debt level.
Which of the following would best explain this
position?
A) Company B has much higher operating income than Company A.
B) Company B has more total assets than Company A.
C) Company A has a lower times interest earned ratio and thus the analyst is not worried about
the amount of debt.
D) Company B has a higher operating return on assets than Company A, but Company A has a
higher return on equity than Company B.
D
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If current assets are $110,000 and current liabilities are $50,000, working capital will be:
A. 45.5%. B. 2:2. C. $60,000. D. $160,000.
For long-run pricing of the cell phones, what price will most likely be used by Quick Connect?
Quick Connect manufactures high-tech cell phones. Quick Connect has a policy of adding a 20% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month: Output units 1,250 phones Machine-hours 750 hours Direct manufacturing labor-hours 700 hours Direct materials per unit $20 Direct manufacturing labor per hour $8 Variable manufacturing overhead costs $175,000.00 Fixed manufacturing overhead costs $126,300 Product and process design costs $143,000 Marketing and distribution costs $153,645 A) $237.32 B) $402.27 C) $502.84 D) $603.41