Question 1

The book value of 4 million shares of Zircon Global Ltd. is $34 million. What is the book value per share of Zircon Global Ltd?

Accepted Answer

A)  $136.00 per share 
B)  $8.50 per share 
C)  $4.00 per share 
D)  $0.60 per share 
E)  $30.00 per share 
A)  $136.00 per share 
B)  $8.50 per share 
C)  $4.00 per share 
D)  $0.60 per share 
E)  $30.00 per share

Question 2

Which of the following is considered by analysts when comparing the results of two firms?

Accepted Answer

A)  Total assets 
B)  Net operating income 
C)  Net sales 
D)  Gross profit 
E)  Retained earnings 
A)  Total assets 
B)  Net operating income 
C)  Net sales 
D)  Gross profit 
E)  Retained earnings

Question 3

Which of the following is true about the book value and market value of a firm's debt?

Accepted Answer

A)  The book value of a firm's debt will be higher than the market value of the firm's debt. 
B)  The book value of a firm's debt will be equal to the market value of the firm's debt. 
C)  The book value of a firm's debt will be equal to the market value of firm's assets. 
D)  The market value of a firm's debt will be higher than the book value of firm's assets. 
E)  The market value of a firm's debt will be equal to the market value of a firm's assets. 
A)  The book value of a firm's debt will be higher than the market value of the firm's debt. 
B)  The book value of a firm's debt will be equal to the market value of the firm's debt. 
C)  The book value of a firm's debt will be equal to the market value of firm's assets. 
D)  The market value of a firm's debt will be higher than the book value of firm's assets. 
E)  The market value of a firm's debt will be equal to the market value of a firm's assets.

Question 4

What is the appropriate measure used to examine whether a management is maximizing the firm's stock price?

Accepted Answer

A)  Retained earnings 
B)  Net income 
C)  Cash flows 
D)  Earnings per share 
E)  Accounting profits 
A)  Retained earnings 
B)  Net income 
C)  Cash flows 
D)  Earnings per share 
E)  Accounting profits

Question 5

Which of the following accounting principles is used in the United States?

Accepted Answer

A)  International Accounting Standards Board (IAS
B)  
B)  International Financial Reporting Standards (IFRS) 
C)  Generally Accepted Accounting Principles (GAAP) 
D)  National Advisory Accounting Standards (NAAS) 
E)  Financial Accounting Standards Principles (FASP) 
A)  International Accounting Standards Board (IAS
B)  
B)  International Financial Reporting Standards (IFRS) 
C)  Generally Accepted Accounting Principles (GAAP) 
D)  National Advisory Accounting Standards (NAAS) 
E)  Financial Accounting Standards Principles (FASP)

Question 6

Which of the following was created to develop and approve a set of common International Financial Reporting Standards (IFRS)?

Accepted Answer

A)  International Accounting Standards Board (IAS
B)  
B)  Securities and Exchange Commission (SE
C)  
C)  Generally Accepted Accounting Principles (GAAP) 
D)  International Federation of Accountants 
E)  International Accounting Standards Committee 
A)  International Accounting Standards Board (IAS
B)  
B)  Securities and Exchange Commission (SE
C)  
C)  Generally Accepted Accounting Principles (GAAP) 
D)  International Federation of Accountants 
E)  International Accounting Standards Committee

Question 7

If a firm's existing quick ratio is 1.0, and all other variables remain unchanged, the quick ratio can be increased by:

Accepted Answer

A)  repayment of a loan. 
B)  selling of inventory on credit. 
C)  receiving interest income. 
D)  collecting accounts receivable. 
E)  purchase of fixed assets for cash. 
A)  repayment of a loan. 
B)  selling of inventory on credit. 
C)  receiving interest income. 
D)  collecting accounts receivable. 
E)  purchase of fixed assets for cash.

Question 8

Different accounting practices will not have an impact on the comparative ratio analysis of the firms.

Accepted Answer

A) True 
 B)False

Question 9

Determining whether a firm's financial position is improving or deteriorating requires analysis of more than one set of financial statements. Trend analysis is one method of measuring a firm's performance over time.

Accepted Answer

A) True 
 B)False

Question 10

The balance sheet will have historical values and that will have an impact on the ratios of the firm.

Accepted Answer

A) True 
 B)False

Question 11

Assume that Meyer Corporation is 100 percent equity financed, and has the following information: (1) Earnings before taxes = $1,500;
(2) Sales = $5,000;
(3) Dividend payout ratio = 60%;
(4) Total assets turnover = 2.0;
(5) Applicable tax rate = 30%
The firm's return on equity is:

Accepted Answer

A)  25%. 
B)  30%. 
C)  35%. 
D)  42%. 
E)  50%. 
A)  25%. 
B)  30%. 
C)  35%. 
D)  42%. 
E)  50%.

Question 12

Which of the following dissects a single ratio into two or more related ratios?

Accepted Answer

A)  DuPont analysis 
B)  Ratio analysis 
C)  Comparative analysis 
D)  Trend analysis 
E)  Benchmarking 
A)  DuPont analysis 
B)  Ratio analysis 
C)  Comparative analysis 
D)  Trend analysis 
E)  Benchmarking

Question 13

The proportion of a firm's funds that is provided by shareholders is equal to:

Accepted Answer

A)  the debt ratio minus the times interest earned. 
B)  1 minus the debt ratio. 
C)  the times interest earned plus 1. 
D)  the debt ratio minus the dividends paid. 
E)  the fixed charge coverage ratio minus 1. 
A)  the debt ratio minus the times interest earned. 
B)  1 minus the debt ratio. 
C)  the times interest earned plus 1. 
D)  the debt ratio minus the dividends paid. 
E)  the fixed charge coverage ratio minus 1.

Question 14

Suppose a firm has a growth rate equal to 8 percent, return on assets (ROA) of 10 percent, a debt ratio of 20 percent, and a current stock price of $36. The firm's return on equity (ROE) is:

Accepted Answer

A)  14.0%. 
B)  12.5%. 
C)  15.0%. 
D)  2.5%. 
E)  13.5%. 
A)  14.0%. 
B)  12.5%. 
C)  15.0%. 
D)  2.5%. 
E)  13.5%.

Question 15

Which of the following financial statements shows a firm's financing activities (how funds were generated) and investment activities (how funds were used) over a particular period of time?

Accepted Answer

A)  Balance sheet 
B)  Income statement 
C)  Statement of retained earnings 
D)  Statement of cash flows 
E)  Proxy statement 
A)  Balance sheet 
B)  Income statement 
C)  Statement of retained earnings 
D)  Statement of cash flows 
E)  Proxy statement

Question 16

How is the net worth of a firm calculated?

Accepted Answer

A)  Net worth = Current assets minus current liabilities 
B)  Net worth = Total assets minus current liabilities 
C)  Net worth = Total liabilities minus current assets 
D)  Net worth = Total assets minus total liabilities 
E)  Net worth = Total liabilities minus current liabilities 
A)  Net worth = Current assets minus current liabilities 
B)  Net worth = Total assets minus current liabilities 
C)  Net worth = Total liabilities minus current assets 
D)  Net worth = Total assets minus total liabilities 
E)  Net worth = Total liabilities minus current liabilities

Question 17

A firm's current ratio has steadily increased over the past 5 years, from 1.9 to 3.8. What would a financial analyst probably conclude from this information?

Accepted Answer

A)  The firm's fixed assets turnover has improved. 
B)  The firm's liquidity position has improved. 
C)  The firm's stock price has increased. 
D)  The firm's financial leverage has improved. 
E)  The firm's market value has increased. 
A)  The firm's fixed assets turnover has improved. 
B)  The firm's liquidity position has improved. 
C)  The firm's stock price has increased. 
D)  The firm's financial leverage has improved. 
E)  The firm's market value has increased.

Question 18

Determine the increase or decrease in cash for Rinky Supply Company for last year, given the following information. (Assume no other changes occurred during the past year.) Decrease in marketable securities $25
Increase in accounts receivables $50
Increase in notes payable $30
Decrease in accounts payable $20
Increase in accrued wages and taxes $15
Increase in inventories $35
Retained earnings $5

Accepted Answer

A)  -$50 
B)  +$40 
C)  -$30 
D)  +$20 
E)  -$10 
A)  -$50 
B)  +$40 
C)  -$30 
D)  +$20 
E)  -$10

Question 19

Which of the following is considered a part of cash flow from a financing activity in a statement of cash flow?

Accepted Answer

A)  Increase in corporate bonds 
B)  Decrease in accrued wages 
C)  Increase in inventories 
D)  Decrease in accounts payable 
E)  Increase in fixed assets 
A)  Increase in corporate bonds 
B)  Decrease in accrued wages 
C)  Increase in inventories 
D)  Decrease in accounts payable 
E)  Increase in fixed assets

Question 20

Market value ratios indicate:

Accepted Answer

A)  the effect of liquidity, asset management, and debt management on operating results. 
B)  how much debt the firm has and whether it can take on more debt. 
C)  the firm's ability to meet its current obligations. 
D)  how effectively a firm is managing its assets. 
E)  what investors think of the company's future prospects based on its past performance. 
A)  the effect of liquidity, asset management, and debt management on operating results. 
B)  how much debt the firm has and whether it can take on more debt. 
C)  the firm's ability to meet its current obligations. 
D)  how effectively a firm is managing its assets. 
E)  what investors think of the company's future prospects based on its past performance.

The book value of 4 million shares of Zircon Global Ltd. is $34 million. What is the book value per share of Zircon Global Ltd?

Which of the following is considered by analysts when comparing the results of two firms?

Which of the following is true about the book value and market value of a firm's debt?

What is the appropriate measure used to examine whether a management is maximizing the firm's stock price?

Which of the following accounting principles is used in the United States?

Which of the following was created to develop and approve a set of common International Financial Reporting Standards (IFRS)?

If a firm's existing quick ratio is 1.0, and all other variables remain unchanged, the quick ratio can be increased by:

Different accounting practices will not have an impact on the comparative ratio analysis of the firms.

Determining whether a firm's financial position is improving or deteriorating requires analysis of more than one set of financial statements. Trend analysis is one method of measuring a firm's performance over time.

The balance sheet will have historical values and that will have an impact on the ratios of the firm.

Assume that Meyer Corporation is 100 percent equity financed, and has the following information: (1) Earnings before taxes = $1,500; (2) Sales = $5,000; (3) Dividend payout ratio = 60%; (4) Total assets turnover = 2.0; (5) Applicable tax rate = 30% The firm's return on equity is:

Which of the following dissects a single ratio into two or more related ratios?

The proportion of a firm's funds that is provided by shareholders is equal to:

Suppose a firm has a growth rate equal to 8 percent, return on assets (ROA) of 10 percent, a debt ratio of 20 percent, and a current stock price of $36. The firm's return on equity (ROE) is:

Which of the following financial statements shows a firm's financing activities (how funds were generated) and investment activities (how funds were used) over a particular period of time?

How is the net worth of a firm calculated?

A firm's current ratio has steadily increased over the past 5 years, from 1.9 to 3.8. What would a financial analyst probably conclude from this information?

Which of the following is considered a part of cash flow from a financing activity in a statement of cash flow?

Market value ratios indicate:

An Overview of Managerial Finance

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debtcharacteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Financing Liabilities

Managing Short-Term Assets

Financial Planning and Control

Filters

Exam 2: Analysis of Financial Statements

The book value of 4 million shares of Zircon Global Ltd. is $34 million. What is the book value per share of Zircon Global Ltd?

Which of the following is considered by analysts when comparing the results of two firms?

Which of the following is true about the book value and market value of a firm's debt?

What is the appropriate measure used to examine whether a management is maximizing the firm's stock price?

Which of the following accounting principles is used in the United States?

Which of the following was created to develop and approve a set of common International Financial Reporting Standards (IFRS)?

If a firm's existing quick ratio is 1.0, and all other variables remain unchanged, the quick ratio can be increased by:

Different accounting practices will not have an impact on the comparative ratio analysis of the firms.

Determining whether a firm's financial position is improving or deteriorating requires analysis of more than one set of financial statements. Trend analysis is one method of measuring a firm's performance over time.

The balance sheet will have historical values and that will have an impact on the ratios of the firm.

Assume that Meyer Corporation is 100 percent equity financed, and has the following information: (1) Earnings before taxes = $1,500; (2) Sales = $5,000; (3) Dividend payout ratio = 60%; (4) Total assets turnover = 2.0; (5) Applicable tax rate = 30% The firm's return on equity is:

Which of the following dissects a single ratio into two or more related ratios?

The proportion of a firm's funds that is provided by shareholders is equal to:

Suppose a firm has a growth rate equal to 8 percent, return on assets (ROA) of 10 percent, a debt ratio of 20 percent, and a current stock price of $36. The firm's return on equity (ROE) is:

Which of the following financial statements shows a firm's financing activities (how funds were generated) and investment activities (how funds were used) over a particular period of time?

How is the net worth of a firm calculated?

A firm's current ratio has steadily increased over the past 5 years, from 1.9 to 3.8. What would a financial analyst probably conclude from this information?

Which of the following is considered a part of cash flow from a financing activity in a statement of cash flow?

Market value ratios indicate:

An Overview of Managerial Finance

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debtcharacteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Financing Liabilities

Managing Short-Term Assets

Financial Planning and Control

Filters