Peter Welsh, CFA, gathered the following information from a company"s most recent financial statements ( U.S. $ in millions): Preferred stock 40 Common stock 120 Additional paid-in capital 30 Retained earnings 190 Treasury stock (55) Total shareholders" equity 325 Total number of common shares outstanding 10 million Tax rate 40% Welsh also determined that the company uses the LIFO inventory method, but most companies in the industry use the FIFO method. The footnotes to the financial statements indicate that if the company had used the FIFO method, the inventory balance would have been $ 50 million higher than the amount reported on the company"s most recent financial statements. If the company"s common stock is currently selling for $70 per share, the most appropriate price to book value ratio to use in valuing the company is:
A. 2.22.
B. 2.03.
C. 2.16.
passage oneWhich is safer-staying at home, traveling to work on publictransport, or working in the office Surprisingly, each of thesecarries the same risk, which is very low. However, what aboutflying compared to working in the chemical industryUnfortunately, the former is 65 times riskier than the latter! Infact, the accident rate of workers in the chemical industry is lessthan that of almost any of human activity, and almost as safe asstaying at home. The trouble with the chemical industry is that when things go wrong they often cause death tothose living nearby. It is this which makes chemical accidents so newsworthy. Fortunately, they areextremely rare. The most famous ones happened at Texas City (1947),Flixborough (1974),Seveso (1976), Pemex (1984) and Bhopal (1984). Some of these are always in the minds of the people even though the loss of life was small. Noone died at Seveso, and only 28 workers at Flixborough. The worst accident of all was Bhopal,where up to 3,000 were killed. The Texas City explosion of fertilizer killed 552. The Pemex fire at astorage plant for natural gas in the suburbs of Mexico City took 542 lives, just a month before theunfortunate event at Bhopal. Some experts have discussed these accidents and used each accident to illustrate a particulardanger. Thus the Texas City explosion was caused by tons of ammonium nitrate(硝酸铵),whichis safe unless stored in great quantity. The Flixborough fireball was the fault of management,which took risks to keep production going during essential repairs. The Seveso accident showswhat happens if the local authorities lack knowledge of the danger on their doorstep. When thepoisonous gas drifted over the town, local leaders were incapable of taking effective action. ThePemex fire was made worse by an overloaded site in an overcrowded suburb. The fire set off achain reactions exploding storage tanks. Yet, by a miracle, the two largest tanks did not explode.Had these caught fire, then 3,000 strong rescue team and fire fighters would all have died. Which of the following statements is true
A. Working at the office is safer than staying at home.
B. Traverlling to work on public transport is safer than working at the office.
C. Staying at home is safer than working in the chemical industry.
D. Working in the chemical industry is safer than traveling by air.
An analyst gathered the following data for the Parker Corp. for the year ended December 31, 2008: EPS2008=$1.75 Dividends2008=$1.40 Betaparker=1.17 Long-term bond rate = 6.75% Rate of return S&P500=12.00% The firm has changed its dividend policy and now plans to pay out 60% of its earnings as dividends in the future. If the long-term growth rate in earnings and dividends is expected to be 5% , the appropriate price to earnings (P/E) ratio for Parker will be:
A. 7.98.
B. 9.14.
C. 7.60.
Emanuel Rodriguez, CFO of Monterrey Spikes Sports Goods Inc. , has gathered the following information about the company: 2000 2007 Sales $128.4 million 220.0 million ROA 10% 12% Net profit margin 6% 7% Number shares outstanding 5 million 6 million Rodriguez expects sales in 2008 to grow at the historical compound annual growth of sales from the year 2000 to 2007. For the year 2008, the net profit margin and the number of shares outstanding are expected to remain unchanged from the year 2007. The company"s earnings per share (EPS), for the year 2008, is closest to:
A. $2.74.
B. $2.77.
C. $4.69.