Bus 401 Week 4 Quiz Uop Exam Assignment

BUS 401 Week 4 Quiz

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1. Operating leverage refers to ________

1. Financing a portion of the firm’s assets with securities bearing a fixed rte of return

2. The additional chance or insolvency borne by the common shareholder.

3. The incurrence of fixed operating costs in the firm’s income stream

4. A high degree of variable costs of production

2. A firm that uses large amounts of debt financing in an industry characterized by a high degree of business risk would have ______ earnings per share fluctuations resulting from changes in levels of sales.

1. No

2. Constant

3. Large

4. D Small

3. JB Corporation has a retained earnings balance of $1,000,000. The company reported net income of $200,000, sales of $2,000,000, and had 100,000 shares of common stock outstanding. The company announced a dividend of $ 1 per share. Therefore, the company’s dividend payout ratio is _________.

1. 10%

2. 20%

3. 50%

4. 100%

4. Assume Harris, Inc. Has 10,000,000 common shares outstanding that have a par value of $2 per share. The stock is currently trading for $30 per share. The firm reported a net profit after-tax of $25,000,000. All else equal, what will happen to earnings per share if the company issues a 10 % stock dividend?

1. Earnings per share will remain the same since a stock dividend does not create an expense.

2. Earnings per share will increase because the dividend increases the value of the company.

3. Earnings per share will decrease because the number of shares outstanding will go up.

4. The impact cannot be determined without additional information on the new price per

5. All of the following are likely to...