Exam 5: Risk Analysis

Short-term ____________________________ represents a firm's near-term ability to generate cash to service working capital needs and debt service requirements.

When the excess of ROA over the after-tax cost of borrowing declines, additional ________________________________________ begins to reduce the return to common shareholders.

One common problem with the current ratio is that it is susceptible to "window dressing." If prior to the end of the accounting period Saxon Company has a current ratio of 1.5 and management wishes to boost its current ratio it may decide to:

Refer to the information for Mobile Company . Mobile's 2010 Inventory Turnover ratio is:

By adding the number of days that inventory is held to the number of days that accounts receivable is outstanding an analyst can calculate the number of days of _____________________________________________ the firm requires.

Changes in interest rates can typically affect firms in all of the following ways except :

The source of risk related to management competence, strategic direction and lawsuits is _________________________.

The source of risk related to interest rate changes and demographic changes is ____________________.

One problem with debt ratios is that they provide no information about the ability of the firm to generate ________________________________________ to service debt.

The operating cycle must not only generate cash to supply ________________________________________ needs, it must generate sufficient cash to service debt.

When a financial analyst examines the credit risk of a company, it is common that he or she uses a set of factors that all begin with the letter "C." Each factor provides a consideration that enters into the lending decision. List and discuss how each of the factors affects a company's credit risk.

Market equity beta measures the covariability of a firm's returns with the returns of:

Refer to the information for Mobile Company . Mobile's Operating Cash Flow to Current Liabilities ratio in 2010 was:

Bankruptcy analysis research has gone through many iterations, from univariate bankruptcy prediction models to sophisticated logit models. However, after examining the results of the research there appear to be a number of common factors that consistently explain bankruptcy. These factors can be grouped into investment factors, financing factors, operating factors. For each of the three groups discuss specific factors that have been found to significantly explain bankruptcy.

The analysis of short-term liquidity risk requires an understanding of the _________________________ of a firm.

Marker's 2012 Long-term Debt to Shareholders' Equity ratio is:

The ________________________________________ ratio indicates the number of times that net income before interest expense and income taxes exceeds interest expense.

Working capital is defined as ______________________ minus _____________________.

Refer to the information for Mobile Company . Mobile's quick ratio changed by what percentage from 2009 to 2010?

The current ratio is one of the measures of the __________ of the firm.