Question 1

Please refer to Table 4-1 for the following questions.
Table 4-1
Stewart Company
Balance Sheet
  
-Based on the information in Table 4-1,the OROA is

Accepted Answer

A)  24.73%. 
B)  39.50%. 
C)  46.54%. 
D)  52.78%. 
A)  24.73%. 
B)  39.50%. 
C)  46.54%. 
D)  52.78%.

Question 2

Acme Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000 and total assets of $70,000.What is Acme's level of current liabilities?

Accepted Answer

A)  $8,400 
B)  $9,400 
C)  $12,348 
D)  $10,600 
A)  $8,400 
B)  $9,400 
C)  $12,348 
D)  $10,600

Question 3

Please refer to Table 4-1 for the following questions.
Table 4-1
Stewart Company
Balance Sheet
  
-Based on the information in Table 4-1,the inventory turnover ratio is

Accepted Answer

A)  1.3 times. 
B)  2.0 times. 
C)  2.5 times. 
D)  2.9 times. 
A)  1.3 times. 
B)  2.0 times. 
C)  2.5 times. 
D)  2.9 times.

Question 4

Operating profits or EBIT is used to measure a firm's profits on assets because it does not include the firm's cost of debt financing.

Accepted Answer

A) True 
 B)False

Question 5

Company A has a higher days sales outstanding ratio than Company B.Therefore,

Accepted Answer

A)  Company A sells more on credit than Company B. 
B)  Company A has a higher percentage of cash to credit sales than Company B. 
C)  Company A must be collecting its accounts receivable faster than Company B, on average. 
D)  other things being equal, Company B has a cash flow advantage over Company A. 
A)  Company A sells more on credit than Company B. 
B)  Company A has a higher percentage of cash to credit sales than Company B. 
C)  Company A must be collecting its accounts receivable faster than Company B, on average. 
D)  other things being equal, Company B has a cash flow advantage over Company A.

Question 6

It is commonly accepted that the industry average for a ratio is the ideal goal for a financial manager to achieve.

Accepted Answer

A) True 
 B)False

Question 7

High Inc.has an accounts receivable turnover ratio of 7.3.Low Company has an accounts receivable turnover ratio of 5.Assuming that High and Low have the same sales level,which of the following statements is correct?

Accepted Answer

A)  High's average collection period is less than Low's. 
B)  Low's average collection period is less than High's. 
C)  High has a higher accounts receivable balance on average than does Low Company. 
D)  Low Company has (on average) a lower accounts receivable balance than does High. 
A)  High's average collection period is less than Low's. 
B)  Low's average collection period is less than High's. 
C)  High has a higher accounts receivable balance on average than does Low Company. 
D)  Low Company has (on average) a lower accounts receivable balance than does High.

Question 8

A company with a current ratio higher than industry average must also have a quick ratio higher than industry average because both ratios measure liquidity.

Accepted Answer

A) True 
 B)False

Question 9

Ratio analysis enhances our understanding of three basic attributes of performance: liquidity,profitability,and the ability to create shareholder value.

Accepted Answer

A) True 
 B)False

Question 10

Please refer to Table 4-2 for the following questions.
Table 4-2
Drummond Company
Balance Sheet
  
-Based on the information in Table 4-2,the average collection period is

Accepted Answer

A)  70 days. 
B)  81 days. 
C)  89 days. 
D)  127 days. 
A)  70 days. 
B)  81 days. 
C)  89 days. 
D)  127 days.

Question 11

Economic value added is calculated by taking (net income less the cost of all capital)times total assets.

Accepted Answer

A) True 
 B)False

Question 12

Please refer to Table 4-4 for the following questions.
Table 4-4
Wes Donnell, Inc.
Balance Sheet
  
-In addition to the information contained in Table 4-4,you know that the current ratio for 2010 is 4 and that the corporation paid $11,600 in dividends in 2010.What is Wes Donnell's inventory turnover for 2010?

Accepted Answer

A)  0.13 
B)  11.1 
C)  9.3 
D)  7.78 
A)  0.13 
B)  11.1 
C)  9.3 
D)  7.78

Question 13

Complete the following balance sheet using the information given.Round account balances to the nearest dollar.

Accepted Answer

1.Solve for common equity using ROE: Com

Question 14

The current ratio and the acid test ratio both measure financial leverage.

Accepted Answer

A) True 
 B)False

Question 15

Economic value added includes a charge for the cost of equity that is not included on financial statements prepared according to GAAP.

Accepted Answer

A) True 
 B)False

Question 16

Please refer to Table 4-1 for the following questions.
Table 4-1
Stewart Company
Balance Sheet
  
-Based on the information in Table 4-1,the fixed asset turnover ratio is

Accepted Answer

A)  1.69. 
B)  2.17. 
C)  4.39. 
D)  4.80. 
A)  1.69. 
B)  2.17. 
C)  4.39. 
D)  4.80.

Question 17

Financial ratios are useful for measuring performance because maximizing the return on equity for common shareholders is the primary goal of financial managers.

Accepted Answer

A) True 
 B)False

Question 18

Please refer to Table 4-1 for the following questions.
Table 4-1
Stewart Company
Balance Sheet
  
-Based on the information in Table 4-1,the accounts receivable turnover is

Accepted Answer

A)  10.00. 
B)  11.11. 
C)  8.11. 
D)  9.50. 
A)  10.00. 
B)  11.11. 
C)  8.11. 
D)  9.50.

Question 19

Total asset turnover is equal to accounts receivable turnover plus inventory turnover plus fixed asset turnover.

Accepted Answer

A) True 
 B)False

Question 20

Please refer to Table 4-5 for the following questions.
Table 4-5
Yen Inc.
Balance Sheet
   
Yen Inc.
Income Statement
For the year ended December 31, 2010
  
-Based on the information contained in Tables 4-5,what was Yen's operating profit margin for 2010?

Accepted Answer

A)  26.50% 
B)  21.34% 
C)  14.29% 
D)  11.67% 
A)  26.50% 
B)  21.34% 
C)  14.29% 
D)  11.67%

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the OROA is

Acme Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000 and total assets of $70,000.What is Acme's level of current liabilities?

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the inventory turnover ratio is

Operating profits or EBIT is used to measure a firm's profits on assets because it does not include the firm's cost of debt financing.

Company A has a higher days sales outstanding ratio than Company B.Therefore,

It is commonly accepted that the industry average for a ratio is the ideal goal for a financial manager to achieve.

High Inc.has an accounts receivable turnover ratio of 7.3.Low Company has an accounts receivable turnover ratio of 5.Assuming that High and Low have the same sales level,which of the following statements is correct?

A company with a current ratio higher than industry average must also have a quick ratio higher than industry average because both ratios measure liquidity.

Ratio analysis enhances our understanding of three basic attributes of performance: liquidity,profitability,and the ability to create shareholder value.

Please refer to Table 4-2 for the following questions. Table 4-2 Drummond Company Balance Sheet -Based on the information in Table 4-2,the average collection period is

Economic value added is calculated by taking (net income less the cost of all capital)times total assets.

Complete the following balance sheet using the information given.Round account balances to the nearest dollar.

The current ratio and the acid test ratio both measure financial leverage.

Economic value added includes a charge for the cost of equity that is not included on financial statements prepared according to GAAP.

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the fixed asset turnover ratio is

Financial ratios are useful for measuring performance because maximizing the return on equity for common shareholders is the primary goal of financial managers.

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the accounts receivable turnover is

Total asset turnover is equal to accounts receivable turnover plus inventory turnover plus fixed asset turnover.

Please refer to Table 4-5 for the following questions. Table 4-5 Yen Inc. Balance Sheet Yen Inc. Income Statement For the year ended December 31, 2010 -Based on the information contained in Tables 4-5,what was Yen's operating profit margin for 2010?

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Cash,receivables,and Inventory Management

Filters

Exam 4: Evaluating a Firms Financial Performance

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the OROA is

Acme Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000 and total assets of $70,000.What is Acme's level of current liabilities?

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the inventory turnover ratio is

Operating profits or EBIT is used to measure a firm's profits on assets because it does not include the firm's cost of debt financing.

Company A has a higher days sales outstanding ratio than Company B.Therefore,

It is commonly accepted that the industry average for a ratio is the ideal goal for a financial manager to achieve.

High Inc.has an accounts receivable turnover ratio of 7.3.Low Company has an accounts receivable turnover ratio of 5.Assuming that High and Low have the same sales level,which of the following statements is correct?

A company with a current ratio higher than industry average must also have a quick ratio higher than industry average because both ratios measure liquidity.

Ratio analysis enhances our understanding of three basic attributes of performance: liquidity,profitability,and the ability to create shareholder value.

Please refer to Table 4-2 for the following questions. Table 4-2 Drummond Company Balance Sheet -Based on the information in Table 4-2,the average collection period is

Economic value added is calculated by taking (net income less the cost of all capital)times total assets.

Complete the following balance sheet using the information given.Round account balances to the nearest dollar.

The current ratio and the acid test ratio both measure financial leverage.

Economic value added includes a charge for the cost of equity that is not included on financial statements prepared according to GAAP.

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the fixed asset turnover ratio is

Financial ratios are useful for measuring performance because maximizing the return on equity for common shareholders is the primary goal of financial managers.

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the accounts receivable turnover is

Total asset turnover is equal to accounts receivable turnover plus inventory turnover plus fixed asset turnover.

Please refer to Table 4-5 for the following questions. Table 4-5 Yen Inc. Balance Sheet Yen Inc. Income Statement For the year ended December 31, 2010 -Based on the information contained in Tables 4-5,what was Yen's operating profit margin for 2010?

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Cash,receivables,and Inventory Management

Filters