Question 1

Which one of the following ratios indicates the average number of days that sales are outstanding?

Accepted Answer

A)  average payment period 
B)  average collection period 
C)  quick ratio 
D)  interest coverage 
A)  average payment period 
B)  average collection period 
C)  quick ratio 
D)  interest coverage

Question 2

The fixed charge coverage ratio is a stricter measure of a firm's ability to meet its fixed payment obligations than the interest coverage ratio.

Accepted Answer

A) True 
 B)False

Question 3

All other things being equal, a decrease in the selling price of a product for a firm would:

Accepted Answer

A)  increase the break-even point 
B)  decrease the break-even point 
C)  have no impact on the break-even point 
D)  not enough information given 
A)  increase the break-even point 
B)  decrease the break-even point 
C)  have no impact on the break-even point 
D)  not enough information given

Question 4

A cross-sectional analysis would be used to evaluate a firm's performance over time.

Accepted Answer

A) True 
 B)False

Question 5

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

Accepted Answer

A)  10 
B)  36.5 
C)  25 
D)  14.6 
A)  10 
B)  36.5 
C)  25 
D)  14.6

Question 6

_____________ costs are a function of quantity sold, not time.

Accepted Answer

A)  fixed 
B)  depreciation 
C)  operating 
D)  variable 
A)  fixed 
B)  depreciation 
C)  operating 
D)  variable

Question 7

Budgets are written financial plans utilized in sales forecasts.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a variable cost?

Accepted Answer

A)  direct materials 
B)  direct labor 
C)  delivery costs 
D)  rent 
A)  direct materials 
B)  direct labor 
C)  delivery costs 
D)  rent

Question 9

If a firm's sales are $2,000,000, its cost of goods sold is $1,500,000, and its total assets are $1,000,000, what is total asset turnover?

Accepted Answer

A)  2.0 times 
B)  1.5 times 
C)  0.5 times 
D)  .67 times 
A)  2.0 times 
B)  1.5 times 
C)  0.5 times 
D)  .67 times

Question 10

A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its operating breakeven point if it desires net operating income of $10,000, not $0 (zero)?

Accepted Answer

A)  12,500 units 
B)  15,000 units 
C)  17,500 units 
D)  25,000 units 
A)  12,500 units 
B)  15,000 units 
C)  17,500 units 
D)  25,000 units

Question 11

If a firm's variable cost per unit increases, the firm's operating breakeven point will

Accepted Answer

A)  decrease 
B)  increase 
C)  remain unchanged 
D)  change in an undetermined direction 
A)  decrease 
B)  increase 
C)  remain unchanged 
D)  change in an undetermined direction

Question 12

All other things being equal, a decrease in the contribution margin for a firm would:

Accepted Answer

A)  increase the break-even point 
B)  decrease the break-even point 
C)  have no impact on the break-even point 
D)  not enough information given 
A)  increase the break-even point 
B)  decrease the break-even point 
C)  have no impact on the break-even point 
D)  not enough information given

Question 13

Cross-sectional analysis is used to evaluate a firm's performance over time.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is most correct?

Accepted Answer

A)  Larger values of the equity multiplier imply a greater use of leverage by the firm. 
B)  The receivables turnover is computed by dividing year-end accounts payable by the year-end accounts receivables. 
C)  The operating return on assets is computed as the earnings after interest and taxes divided by total assets. 
D)  The quick ratio is computed by dividing current liabilities by owners' equity. 
A)  Larger values of the equity multiplier imply a greater use of leverage by the firm. 
B)  The receivables turnover is computed by dividing year-end accounts payable by the year-end accounts receivables. 
C)  The operating return on assets is computed as the earnings after interest and taxes divided by total assets. 
D)  The quick ratio is computed by dividing current liabilities by owners' equity.

Question 15

Net sales ∕ Total assets

Accepted Answer

A)  Total asset turnover 
B)  Fixed assets turnover 
C)  Average collection period 
D)  Inventory turnover 
A)  Total asset turnover 
B)  Fixed assets turnover 
C)  Average collection period 
D)  Inventory turnover

Question 16

Asset management ratios are one of the five basic categories of ratios.

Accepted Answer

A) True 
 B)False

Question 17

A larger average payment period is considered to be better.

Accepted Answer

A) True 
 B)False

Question 18

Assume a firm is developing, manufacturing, and selling a basic software package at $300 per copy. Raw material and direct labor total $100 per unit. Fixed costs are $150,000. If unit sales are 3,000 per year, what will be the break-even point in units?

Accepted Answer

A)  375 units 
B)  500 units 
C)  750 units 
D)  800 units 
A)  375 units 
B)  500 units 
C)  750 units 
D)  800 units

Question 19

Return on equity is calculated as net income divided by the sum of common and preferred equity.

Accepted Answer

A) True 
 B)False

Question 20

Find the net profit margin if earnings before interest and taxes is $20,000, net income is $10,000, sales are $50,000, and total assets are $100,000.

Accepted Answer

A)  40% 
B)  20% 
C)  10% 
D)  30% 
A)  40% 
B)  20% 
C)  10% 
D)  30%

Which one of the following ratios indicates the average number of days that sales are outstanding?

The fixed charge coverage ratio is a stricter measure of a firm's ability to meet its fixed payment obligations than the interest coverage ratio.

All other things being equal, a decrease in the selling price of a product for a firm would:

A cross-sectional analysis would be used to evaluate a firm's performance over time.

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

_____________ costs are a function of quantity sold, not time.

Budgets are written financial plans utilized in sales forecasts.

Which of the following is not a variable cost?

If a firm's sales are $2,000,000, its cost of goods sold is $1,500,000, and its total assets are $1,000,000, what is total asset turnover?

A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its operating breakeven point if it desires net operating income of $10,000, not $0 (zero)?

If a firm's variable cost per unit increases, the firm's operating breakeven point will

All other things being equal, a decrease in the contribution margin for a firm would:

Cross-sectional analysis is used to evaluate a firm's performance over time.

Which of the following statements is most correct?

Net sales ∕ Total assets

Asset management ratios are one of the five basic categories of ratios.

A larger average payment period is considered to be better.

Assume a firm is developing, manufacturing, and selling a basic software package at $300 per copy. Raw material and direct labor total $100 per unit. Fixed costs are $150,000. If unit sales are 3,000 per year, what will be the break-even point in units?

Return on equity is calculated as net income divided by the sum of common and preferred equity.

Find the net profit margin if earnings before interest and taxes is $20,000, net income is $10,000, sales are $50,000, and total assets are $100,000.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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Exam 14: Financial Analysis and Long-Term Financial Planning

Which one of the following ratios indicates the average number of days that sales are outstanding?

The fixed charge coverage ratio is a stricter measure of a firm's ability to meet its fixed payment obligations than the interest coverage ratio.

All other things being equal, a decrease in the selling price of a product for a firm would:

A cross-sectional analysis would be used to evaluate a firm's performance over time.

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

_____________ costs are a function of quantity sold, not time.

Budgets are written financial plans utilized in sales forecasts.

Which of the following is not a variable cost?

If a firm's sales are $2,000,000, its cost of goods sold is $1,500,000, and its total assets are $1,000,000, what is total asset turnover?

A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its operating breakeven point if it desires net operating income of $10,000, not $0 (zero)?

If a firm's variable cost per unit increases, the firm's operating breakeven point will

All other things being equal, a decrease in the contribution margin for a firm would:

Cross-sectional analysis is used to evaluate a firm's performance over time.

Which of the following statements is most correct?

Net sales ∕ Total assets

Asset management ratios are one of the five basic categories of ratios.

A larger average payment period is considered to be better.

Assume a firm is developing, manufacturing, and selling a basic software package at $300 per copy. Raw material and direct labor total $100 per unit. Fixed costs are $150,000. If unit sales are 3,000 per year, what will be the break-even point in units?

Return on equity is calculated as net income divided by the sum of common and preferred equity.

Find the net profit margin if earnings before interest and taxes is $20,000, net income is $10,000, sales are $50,000, and total assets are $100,000.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters