Exam 8: Stock

Which of the following has no impact on cash flow?

Days sales outstanding (average collection period or receivables turnover)measures

Stock dividends increase

Firms with too much debt are undercapitalized.

Creditors would prefer 1. a quick ratio of 1.2 to a quick ratio of 0.8 2. a quick ratio of 0.8 to a quick ratio of 1.2 3. days sales outstanding of 46 to a days sales outstanding of 35 4. days sales outstanding of 35 to a days sales outstanding of 46

If the firm's current ratio exceeds 1:1 and the firm retires an account payable, the quick ratio increases.

Preferred stock generally pays

The current ratio and the quick ratio are measures of asset usage.

The greater the numerical value of the debt ratio, the riskier the firm.

The quick ratio is a better measure of liquidity than the current ratio for manufacturers.

When a firm makes a profitable sale, its total assets increase.

What is the debt/net worth ratio and the debt to total assets ratio for a firm with total debt of $600,000 and equity of $400,000?

Repurchases of shares may be viewed as an alternative to paying cash dividends.

An increase in an asset is a cash inflow.

Most stockholders of publicly held stock have pre-emptive rights.

The statement of cash flow places emphasis on management's ability to retire debt.

Earnings are

Analysis of preferred stock uses

Stock splits and stock dividends increase the earning capacity of the firm.

If inventory is sold for cash, inventory turnover is increased, but inventory turnover is not affected if inventory is sold on credit.