Question 1

Ratio analysis is a financial technique that involves dividing various financial statements numbers into one another.

Accepted Answer

A) True 
 B)False

Question 2

In cost-volume-profit analysis, a firm "breaks even" when its total revenues:

Accepted Answer

A)  equal variable costs 
B)  equal total costs 
C)  equal fixed costs 
D)  are less than the sum of variable and fixed costs 
A)  equal variable costs 
B)  equal total costs 
C)  equal fixed costs 
D)  are less than the sum of variable and fixed costs

Question 3

A low current ratio (low relative to, say, industry norms) may indicate a company may face low difficulty in paying its bills.

Accepted Answer

A) True 
 B)False

Question 4

If a firm's inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

Accepted Answer

A)  2 times 
B)  3 times 
C)  4 times 
D)  5 times 
A)  2 times 
B)  3 times 
C)  4 times 
D)  5 times

Question 5

Trend or time series analysis is used to compare the performance of different firms at the same point in time.

Accepted Answer

A) True 
 B)False

Question 6

Ratios used to compare different firms at the same point in time belong to a category of analysis called:

Accepted Answer

A)  time series analysis 
B)  cross-sectional analysis 
C)  industry comparative analysis 
D)  just-in-time analysis 
A)  time series analysis 
B)  cross-sectional analysis 
C)  industry comparative analysis 
D)  just-in-time analysis

Question 7

Financial planning begins with a sales forecast for one or more years.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is false?

Accepted Answer

A)  Time series analysis evaluates a firm's performance over time. 
B)  Industry comparative analysis compares a firm's ratios against average ratios against average ratios for other companies in the industry. 
C)  The average collection period is calculated as the year-end accounts receivable divided by the net sales. 
D)  Ratio analysis allows for comparison of firms of different sizes. 
A)  Time series analysis evaluates a firm's performance over time. 
B)  Industry comparative analysis compares a firm's ratios against average ratios against average ratios for other companies in the industry. 
C)  The average collection period is calculated as the year-end accounts receivable divided by the net sales. 
D)  Ratio analysis allows for comparison of firms of different sizes.

Question 9

Because debt obligations are paid with cash, the firm's cash flows ultimately determine solvency.

Accepted Answer

A) True 
 B)False

Question 10

An analyst should be careful when conducting ratio analysis to ensure that

Accepted Answer

A)  the overall performance of the firm is not judged on a single ratio. 
B)  the dates of the financial statements being compared are different. 
C)  audited statements are not being used. 
D)  different accounting procedures are used. 
A)  the overall performance of the firm is not judged on a single ratio. 
B)  the dates of the financial statements being compared are different. 
C)  audited statements are not being used. 
D)  different accounting procedures are used.

Question 11

Using the DuPont system of analysis and holding other factors constant, decrease in total asset turnover will result in ________ in the return on equity.

Accepted Answer

A)  an increase 
B)  a decrease 
C)  no change 
D)  an undetermined change 
A)  an increase 
B)  a decrease 
C)  no change 
D)  an undetermined change

Question 12

Debt to asset ratios are one of the five basic categories of ratios.

Accepted Answer

A) True 
 B)False

Question 13

The ________ method of developing a pro forma income statement forecasts sales and values for the cost of goods sold, operating expenses, and interest expense that are expressed as a ratio of projected sales.

Accepted Answer

A)  percent of sales 
B)  accrual 
C)  judgmental 
D)  cash 
A)  percent of sales 
B)  accrual 
C)  judgmental 
D)  cash

Question 14

The quick ratio is always positive.

Accepted Answer

A) True 
 B)False

Question 15

The price-earnings, or P/E, ratio is sometimes called the earnings residual.

Accepted Answer

A) True 
 B)False

Question 16

A 100-Q is a standard filing with the Securities and Exchange Commission (SEC).

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is most correct?

Accepted Answer

A)  Higher levels of fixed costs result in lower levels of operating leverage. 
B)  Higher variable costs result in larger contribution margin. 
C)  Higher fixed costs result in larger break-even quantity. 
D)  Higher leverage results in lower interest costs. 
A)  Higher levels of fixed costs result in lower levels of operating leverage. 
B)  Higher variable costs result in larger contribution margin. 
C)  Higher fixed costs result in larger break-even quantity. 
D)  Higher leverage results in lower interest costs.

Question 18

Which one of the following is not a basic component of the DuPont method of ratio analysis?

Accepted Answer

A)  profit margin 
B)  total asset turnover 
C)  equity multiplier 
D)  liquidity margin 
A)  profit margin 
B)  total asset turnover 
C)  equity multiplier 
D)  liquidity margin

Question 19

Given the following financial data: net income/sales = 6%; sales/total assets = 3.5; debt/total assets = 30%. The return on total assets is:

Accepted Answer

A)  15% 
B)  21% 
C)  30% 
D)  36% 
A)  15% 
B)  21% 
C)  30% 
D)  36%

Question 20

The quick ratio is always greater than or equal to one.

Accepted Answer

A) True 
 B)False

Ratio analysis is a financial technique that involves dividing various financial statements numbers into one another.

In cost-volume-profit analysis, a firm "breaks even" when its total revenues:

A low current ratio (low relative to, say, industry norms) may indicate a company may face low difficulty in paying its bills.

If a firm's inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

Trend or time series analysis is used to compare the performance of different firms at the same point in time.

Ratios used to compare different firms at the same point in time belong to a category of analysis called:

Financial planning begins with a sales forecast for one or more years.

Which of the following statements is false?

Because debt obligations are paid with cash, the firm's cash flows ultimately determine solvency.

An analyst should be careful when conducting ratio analysis to ensure that

Using the DuPont system of analysis and holding other factors constant, decrease in total asset turnover will result in ________ in the return on equity.

Debt to asset ratios are one of the five basic categories of ratios.

The ________ method of developing a pro forma income statement forecasts sales and values for the cost of goods sold, operating expenses, and interest expense that are expressed as a ratio of projected sales.

The quick ratio is always positive.

The price-earnings, or P/E, ratio is sometimes called the earnings residual.

A 100-Q is a standard filing with the Securities and Exchange Commission (SEC).

Which of the following statements is most correct?

Which one of the following is not a basic component of the DuPont method of ratio analysis?

Given the following financial data: net income/sales = 6%; sales/total assets = 3.5; debt/total assets = 30%. The return on total assets is:

The quick ratio is always greater than or equal to one.

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

Ratio analysis is a financial technique that involves dividing various financial statements numbers into one another.

In cost-volume-profit analysis, a firm "breaks even" when its total revenues:

A low current ratio (low relative to, say, industry norms) may indicate a company may face low difficulty in paying its bills.

If a firm's inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

Trend or time series analysis is used to compare the performance of different firms at the same point in time.

Ratios used to compare different firms at the same point in time belong to a category of analysis called:

Financial planning begins with a sales forecast for one or more years.

Which of the following statements is false?

Because debt obligations are paid with cash, the firm's cash flows ultimately determine solvency.

An analyst should be careful when conducting ratio analysis to ensure that

Using the DuPont system of analysis and holding other factors constant, decrease in total asset turnover will result in ________ in the return on equity.

Debt to asset ratios are one of the five basic categories of ratios.

The ________ method of developing a pro forma income statement forecasts sales and values for the cost of goods sold, operating expenses, and interest expense that are expressed as a ratio of projected sales.

The quick ratio is always positive.

The price-earnings, or P/E, ratio is sometimes called the earnings residual.

A 100-Q is a standard filing with the Securities and Exchange Commission (SEC).

Which of the following statements is most correct?

Which one of the following is not a basic component of the DuPont method of ratio analysis?

Given the following financial data: net income/sales = 6%; sales/total assets = 3.5; debt/total assets = 30%. The return on total assets is:

The quick ratio is always greater than or equal to one.

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