Question 1

The use of financing with a fixed charge (such as interest) is termed financial leverage.

Accepted Answer

A) True 
 B)False

Question 2

Stable dividend policy would most commonly imply:

Accepted Answer

A)  a high price/earnings ratio 
B)  a stable dividend yield 
C)  stable dividends per share 
D)  stable earnings per share 
E)  increasing dividends per share 
A)  a high price/earnings ratio 
B)  a stable dividend yield 
C)  stable dividends per share 
D)  stable earnings per share 
E)  increasing dividends per share

Question 3

Dawn Alive reported the following for 2010.   The price/earnings ratio and dividend payout were:

Accepted Answer

A)  19.59 and 52.88% 
B)  16.30 and 52.88% 
C)  16.30 and 44.00% 
D)  19.59 and 44.00% 
E)  37.04 and 52.88% 
A)  19.59 and 52.88% 
B)  16.30 and 52.88% 
C)  16.30 and 44.00% 
D)  19.59 and 44.00% 
E)  37.04 and 52.88%

Question 4

Good Boss Inc.had the following pattern of results related to stock appreciation rights.   The compensation expense would be:

Accepted Answer

The answer of Good Boss Inc.had the following pattern of...

Question 5

Using financial leverage is a good financial strategy from the viewpoint of stockholders of companies having:

Accepted Answer

A)  a high debt ratio 
B)  cyclical highs and lows 
C)  steady or rising profits 
D)  a steadily declining current ratio 
E)  none of the answers are correct 
A)  a high debt ratio 
B)  cyclical highs and lows 
C)  steady or rising profits 
D)  a steadily declining current ratio 
E)  none of the answers are correct

Question 6

A firm might have a low dividend payout ratio if it were planning a major expansion.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a true statement regarding stock options?

Accepted Answer

A)  They may cause dilution of earnings per share. 
B)  They generally allow the purchase of common stock at favorable terms. 
C)  They involve a compensation expense. 
D)  Exercise improves the short-term liquidity and debt position of the issuing firm. 
E)  The potential dilution can be disregarded in financial analysis. 
A)  They may cause dilution of earnings per share. 
B)  They generally allow the purchase of common stock at favorable terms. 
C)  They involve a compensation expense. 
D)  Exercise improves the short-term liquidity and debt position of the issuing firm. 
E)  The potential dilution can be disregarded in financial analysis.

Question 8

Dividend yield relates dividends per share to market price per share.

Accepted Answer

A) True 
 B)False

Question 9

Using financial leverage results in a fixed change that can materially affect the earnings available to the common shareholders.

Accepted Answer

A) True 
 B)False

Question 10

Operating leverage refers to the existence of fixed operating costs.

Accepted Answer

A) True 
 B)False

Question 11

The use of debt financing creates financial leverage.

Accepted Answer

A) True 
 B)False

Question 12

The following data were gathered from the annual report of Desk Products.   The book value per share is:

Accepted Answer

A)  $30.00 
B)  $15.00 
C)  $14.00 
D)  $13.75 
E)  none of the answers are correct 
A)  $30.00 
B)  $15.00 
C)  $14.00 
D)  $13.75 
E)  none of the answers are correct

Question 13

The ratio percentage of earnings retained is the same as that termed:

Accepted Answer

A)  dividend yield 
B)  dividend payout 
C)  this year's retained earnings to net income 
D)  return on common equity 
E)  book value 
A)  dividend yield 
B)  dividend payout 
C)  this year's retained earnings to net income 
D)  return on common equity 
E)  book value

Question 14

Which of the following ratios usually reflects investors opinions of the future prospects for the firm?

Accepted Answer

A)  dividend yield 
B)  book value per share 
C)  price/earnings ratio 
D)  earnings per share 
E)  dividend payout 
A)  dividend yield 
B)  book value per share 
C)  price/earnings ratio 
D)  earnings per share 
E)  dividend payout

Question 15

The best dividend payout ratio:

Accepted Answer

A)  approximates 50% 
B)  continues at the same level as was historically paid 
C)  is similar to the industry average 
D)  is higher than that of competitors 
E)  does not follow any rule of thumb for dividend payout 
A)  approximates 50% 
B)  continues at the same level as was historically paid 
C)  is similar to the industry average 
D)  is higher than that of competitors 
E)  does not follow any rule of thumb for dividend payout

Question 16

Smith reported the following for 2010.   The price earnings ratio and dividend payout were:

Accepted Answer

A)  16.25 and 62.50% 
B)  16.25 and 65.00% 
C)  17.00 and 62.50% 
D)  15.00 and 62.50% 
E)  15.00 and 60.00% 
A)  16.25 and 62.50% 
B)  16.25 and 65.00% 
C)  17.00 and 62.50% 
D)  15.00 and 62.50% 
E)  15.00 and 60.00%

Question 17

Book value per share measures the current value of the net assets on a per share basis.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a reason to interpret book value with caution?

Accepted Answer

A)  Land may be worth more than it cost. 
B)  Depreciable assets may be held. 
C)  Investments may be worth more than their purchase price. 
D)  Patents may have a high market value. 
E)  All of the answers are correct. 
A)  Land may be worth more than it cost. 
B)  Depreciable assets may be held. 
C)  Investments may be worth more than their purchase price. 
D)  Patents may have a high market value. 
E)  All of the answers are correct.

Question 19

SFAS No.123(R) results in greater international comparability in the accounting for share-based transactions.

Accepted Answer

A) True 
 B)False

Question 20

The price/earnings ratio:

Accepted Answer

A)  measures the past earning ability of the firm 
B)  is a gauge of future earning power as seen by investors 
C)  relates price to dividends 
D)  relates price to total net income 
E)  all of the answers are correct 
A)  measures the past earning ability of the firm 
B)  is a gauge of future earning power as seen by investors 
C)  relates price to dividends 
D)  relates price to total net income 
E)  all of the answers are correct

The use of financing with a fixed charge (such as interest) is termed financial leverage.

Stable dividend policy would most commonly imply:

Dawn Alive reported the following for 2010. The price/earnings ratio and dividend payout were:

Good Boss Inc.had the following pattern of results related to stock appreciation rights. The compensation expense would be:

Using financial leverage is a good financial strategy from the viewpoint of stockholders of companies having:

A firm might have a low dividend payout ratio if it were planning a major expansion.

Which of the following is not a true statement regarding stock options?

Dividend yield relates dividends per share to market price per share.

Using financial leverage results in a fixed change that can materially affect the earnings available to the common shareholders.

Operating leverage refers to the existence of fixed operating costs.

The use of debt financing creates financial leverage.

The following data were gathered from the annual report of Desk Products. The book value per share is:

The ratio percentage of earnings retained is the same as that termed:

Which of the following ratios usually reflects investors opinions of the future prospects for the firm?

The best dividend payout ratio:

Smith reported the following for 2010. The price earnings ratio and dividend payout were:

Book value per share measures the current value of the net assets on a per share basis.

Which of the following is not a reason to interpret book value with caution?

SFAS No.123(R) results in greater international comparability in the accounting for share-based transactions.

The price/earnings ratio:

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 9: For the Investor

The use of financing with a fixed charge (such as interest) is termed financial leverage.

Stable dividend policy would most commonly imply:

Dawn Alive reported the following for 2010. The price/earnings ratio and dividend payout were:

Good Boss Inc.had the following pattern of results related to stock appreciation rights. The compensation expense would be:

Using financial leverage is a good financial strategy from the viewpoint of stockholders of companies having:

A firm might have a low dividend payout ratio if it were planning a major expansion.

Which of the following is not a true statement regarding stock options?

Dividend yield relates dividends per share to market price per share.

Using financial leverage results in a fixed change that can materially affect the earnings available to the common shareholders.

Operating leverage refers to the existence of fixed operating costs.

The use of debt financing creates financial leverage.

The following data were gathered from the annual report of Desk Products. The book value per share is:

The ratio percentage of earnings retained is the same as that termed:

Which of the following ratios usually reflects investors opinions of the future prospects for the firm?

The best dividend payout ratio:

Smith reported the following for 2010. The price earnings ratio and dividend payout were:

Book value per share measures the current value of the net assets on a per share basis.

Which of the following is not a reason to interpret book value with caution?

SFAS No.123(R) results in greater international comparability in the accounting for share-based transactions.

The price/earnings ratio:

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters