DeGeorge Exam 3: Multiple Choice

historic earnings are unusually low

A company has a very high PE ratio (60 times). This most likely indicates that:

historic earnings are unusually high

A company has a very low PE ratio (2 times). This most likely indicates that:

3

Shamrock Inc. has total assets of $26 million including cash and marketable securities of $6 million, debt of $5 million, book value of equity of $15 million and market value of equity of $45 million. Last year EBITDA was $4 million and net earnings were $2 million. The price to book ratio is closest to:

22.5

Shamrock Inc. has total assets of $26 million including cash and marketable securities of $6 million, debt of $5 million, book value of equity of $15 million and market value of equity of $45 million. Last year EBITDA was $4 million and net earnings were $2 million. The price to earnings ratio is closest to:

44 million

Use the following to answer questions 25 through 27: Shamrock Inc. has total assets of $26 million including cash and marketable securities of $6 million, debt of $5 million, book value of equity of $15 million and market value of equity of $45 million. Last year EBITDA was $4 million and net earnings were $2 million. What is the enterprise value of the company?

15-20 times

What is a normal PE ratio for the S&P 500?

operating, non-operating, extraordinary

Which of the following depicts the correct order of an income statement:

selling general and administrative expenses

Which of the following items would be reported gross and pretax as opposed to net and after tax?

the return on equity is greater than the sustainable growth rate

Profit margin is 10%, asset turnover is 1.0, earnings per share are $2.00 and dividends per share are $2.50. Which of the following statements is correct?

sustainable growth rate is greater than return on assets

Profit margin is 5%, asset turnover is 1.5, financial leverage is 3.0, earnings per share are $2.00 and there were no dividends. Which of the following statements is correct?

the company has bought back significant treasury stock and has negative equity

On 12/7/2021, AutoZone was trading at just over $2,000.00 per share representing a PE ratio of 21.1 times earnings. The company also has a ROE that is negative. The reason for this odd ratio combination is that: