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Which statements is correct regarding common size

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Reference no: EM132963035

Problem1 : During 2020, a business reports a net profit of $120,000 and pays a dividend of $40,000. How are these events reflected in the balance sheet?

The following information is provided for UIO Limited and its industry:

                                           UIO Limited           Industry
Return on assets              18%                       15%
Operating profit margin      6%                         10%
Total asset turnover            3                            1.5

Suggest aspects of UIO Limited's operations that might be improved in order to bring its operating profitability up to the same level as industry, and discuss other information you might require in order to produce a more complete analysis.

Problem2 : A firm's P/E ratio is affected by which of the following factors?

I Investors' beliefs regarding the firms' growth prospects
II Investors' beliefs regarding the risk of the firm
III The firm's share price
IV The firm's earnings per share

Problem3 : Which of the following statements is correct regarding common size financial statements?
a. A common size balance sheet shows all items as a percentage of shareholders' equity
b. A common size income statement shows the net profit margin
c. Common size financial statements cannot be used for trend analysis
d. A common size income statement shows all items as a percentage of net profit

Reference no: EM132963035

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