Exam 3: Evaluation of Financial Performance

Given the following information, calculate the return on equity for Regrets Only Dating Services, Inc.: Net Profit margin = 5% Total asset turnover = 2 Debt ratio = 0.73

A firm's return on stockholders' equity is a function of its net profit margin, ____, and equity multiplier.

What would be the times interest earned of a company if its total interest charges are $20,000, sales are $220,000, and its net profit margin is 6 percent? Assume a tax rate of 40 percent.

Which of the following is consistent with an increase in a firm's return on investment?

When using financial ratios to analyze a company's ability to maximize shareholders' wealth, all of the following cautions should be considered EXCEPT ____.

The data from ____ is especially useful when analyzing smaller firms.

If a firm has a total asset turnover of 8 times and a return on investment of 15%, its net profit margin must be ____.

Your current assets consist of cash, accounts receivable, and inventory. Total current liabilities equal $200,000. The average collection period is 20 days on average daily credit sales of $2,500. The current ratio is 1.3 and the quick ratio is 0.625. What is the balance in the cash account?

The sales-to-inventory ratio is ____.

AK, Inc. is considering issuing additional long-term debt to finance an expansion. The company currently has $20 million in 5% debt outstanding. Its earnings after-tax (EAT) are $3.0 million, and its marginal and average tax rate is 40 percent. The company is required by the debt holders to maintain its times interest earned ratio at 3.0 or greater. How much additional 10 percent debt can the company issue now and maintain its times interest earned ratio at 3.0? Assume for this calculation that earnings before interest and taxes remains at its present level.

How does a firm determine its enterprise value?

Current assets include the cash a firm already has on hand and in the bank plus any assets that can be converted into cash within a "normal" operating period of ____ month(s).

If a firm's current ratio is 1.5, then ____.

The analysis of the financial performance and condition of a firm with sizable international operations is generally more complicated than analyzing a firm whose operations are largely domestic for all of the following reasons EXCEPT ____.

Economic value added (EVA) is a measure of operating performance that indicates how successful a firm has been at ____.

In general, firms with ____ risk and ____ earnings growth prospects will have higher P/E multiples.

A firm's current ratio is 1.5 and its quick ratio is 1.0. If its current liabilities are $10,000, what are its inventories?

Each of the following is true of successful financial ratio analysis EXCEPT ____.

If a firm's return on investment (i.e., earnings after taxes divided by total assets) is 7% and the firm has no preferred stock financing, it is ____.

Trend analysis reveals whether a firm's performance over a given time period has improved or deteriorated relative to ____.