Exhibit 9-9
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 93

Multiple Choice

Exhibit 9-9
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
The Rollerball Corporation's industry averages are as follows:
Net Profit Margin = 7.5%; Total Asset Turnover = 2.2; Total Assets/ Equity = 2.0
Rollerball Corporation has the following financial statements for year ending 12/31/2009.
(000s omitted)
$\begin{array}{lr} \text { Sales } &5,450 \\ \text { Cost of Goods Sold } &\underline {3,250 }\\ \text { Gross Profit } & 2,200 \\ \text {Depreciation } &820 \\ \text {Operating Expenses } &470 \\ \text { Administration Exp. } &\underline {115 }\\ \text {Operating Profit } & 795 \\ \text { Interest Expense } &\underline {88} \\ \text { Profit Before Taxes } & 707 \\ \text {Taxes } &\underline {247} \\ \text { Net Income } & 460 \\ \text {Dividende } &250\end{array}$ $\begin{array}{lrlr}\text { Assets } && {\text { Liabilities }} \\\hline \text { Cash } & 100 & \text { Notes Payable } & 850 \\\text { Accounts Receivable } & 1,250 & \text { Accounts Payable } & \underline{1,550} \\\text { Inventory } & \underline{1,125} & \text { Total Current Liab. } & {2,400}\\\text { Total Current Assets } & {2,475}&{\text { Long Term Debt }} & 425 \\\text { Net Fixed Assets } & \underline{1,450} & \text { Common Stock } &400 \\ {\text { Total Assets }} &{3,925} & \text { Retained Earnings } & \underline{700 }\\&&(\text { Total Liab \& Earnings }&3,925\\\end{array}$
-Refer to Exhibit 9-9. Calculate Rollerball Corporation's Total Asset Turnover.

• A) 0.72
• B) 0.85
• C) 1.39
• D) 1.65
• E) 2.31

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Definitions:

CAPM Approach

A financial model used to determine the expected return on an investment, considering its risk relative to the market using the Capital Asset Pricing Model.

Shareholder Wealth

The value that shareholders gain from their investment in a company, measured by stock prices and dividends.

Project Risk

The uncertainty associated with achieving project objectives within defined constraints such as scope, time, and budget.

Standard Deviation

Standard deviation is a statistical measure that quantifies the amount of variation or dispersion of a set of data values from the mean, often used to assess investment risks.