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A common-size income statement expresses depreciation as 5.2 percent. This means that depreciation represents 5.2 percent...

A common-size income statement expresses depreciation as 5.2 percent. This means that depreciation represents 5.2 percent of

A taxable earnings.

B sales.

C total assets.

D total owners' equity.

E net income.

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

A price-earnings ratio.

B return on assets.

C return on equity.

D DuPont identity.

E equity multiplier.

Expert Solution

1) In common size income statement every item in common size income statement is calculated based on the percentage of sales

So Depreciation is calculated 5.2% of sales

So Answer is Option B. Sales

2) price earning ratio formula = Market price per share / Earnings per share

It means share holders are willing to pay market price per share for earning per share

In this question share holder is willing to pay $1 per share of annual earnings it means it is price earning ratio

So Answer is : Option A. Price earning ratio

ekkarill92 answered 2 years ago

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