Question 1

An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is likely to indicate that

Accepted Answer

A)  the firm has higher sales than the industry average. 
B)  the firm is selling a product mix that includes more high margin items. 
C)  the firm is managing its inventory inefficiently. 
D)  the firm's products are in inventory for fewer days before they are sold than is average for the industry. 
A)  the firm has higher sales than the industry average. 
B)  the firm is selling a product mix that includes more high margin items. 
C)  the firm is managing its inventory inefficiently. 
D)  the firm's products are in inventory for fewer days before they are sold than is average for the industry.

Question 2

Please refer to Table 4-3 for the following questions.
Table 4-3
Emery Corporation
Balance Sheet Income Statement
  
-Based on the information in Table 4-3,the operating profit margin is

Accepted Answer

A)  13.75%. 
B)  18.59%. 
C)  25.80%. 
D)  33.33%. 
A)  13.75%. 
B)  18.59%. 
C)  25.80%. 
D)  33.33%.

Question 3

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 acid-test ratio is

Accepted Answer

A)  1.17. 
B)  1.33. 
C)  1.39. 
D)  2.15. 
A)  1.17. 
B)  1.33. 
C)  1.39. 
D)  2.15.

Question 4

Financial analysis

Accepted Answer

A)  uses historical financial statements and is thus useful only to assess past performance. 
B)  relies on generally accepted accounting principles to make comparisons between companies valid. 
C)  uses historical financial statements to measure a company's performance and in making financial projections of future performance. 
D)  is accounting record-keeping using generally accepted accounting principles. 
A)  uses historical financial statements and is thus useful only to assess past performance. 
B)  relies on generally accepted accounting principles to make comparisons between companies valid. 
C)  uses historical financial statements to measure a company's performance and in making financial projections of future performance. 
D)  is accounting record-keeping using generally accepted accounting principles.

Question 5

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 times interest earned ratio is

Accepted Answer

A)  11.48. 
B)  5.25. 
C)  4.88. 
D)  8.65. 
A)  11.48. 
B)  5.25. 
C)  4.88. 
D)  8.65.

Question 6

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,assuming that no preferred dividends were paid,the return on common equity is

Accepted Answer

A)  55.15%. 
B)  44.86%. 
C)  38.83%. 
D)  17.56%. 
A)  55.15%. 
B)  44.86%. 
C)  38.83%. 
D)  17.56%.

Question 7

Asset efficiency ratios for Fischer,Inc.are given in the table below.Based on this information,Fischer,Inc.'s fixed asset turnover ratio is likely to be ________.

Accepted Answer

A)  equal to 3.50 
B)  less than 3.50 
C)  greater than 3.50 
D)  negative 
A)  equal to 3.50 
B)  less than 3.50 
C)  greater than 3.50 
D)  negative

Question 8

Return on equity is driven by (1)the spread between the operating return on assets and the interest rate,and (2)changes in the debt ratio.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements concerning Economic Value Added (EVA)is MOST correct?

Accepted Answer

A)  The higher the cost of capital, the higher the EVA, other things being held constant. 
B)  EVA can be negative even if operating profits are positive. 
C)  A company with positive net income will have positive EVA. 
D)  Higher operating return on assets will result in lower EVA for a company with a debt ratio over 50%. 
A)  The higher the cost of capital, the higher the EVA, other things being held constant. 
B)  EVA can be negative even if operating profits are positive. 
C)  A company with positive net income will have positive EVA. 
D)  Higher operating return on assets will result in lower EVA for a company with a debt ratio over 50%.

Question 10

When comparing a firm to its peers,why is it difficult to determine the industry to which the firm belongs? Why should you be careful when comparing a firm with industry norms?

Accepted Answer

1.It is sometimes difficult to determine

Question 11

Apollo Corp.reported the following balance sheet:
 
Apollo Corp.'s current ratio is

Accepted Answer

A)  2.59. 
B)  2.74. 
C)  2.98. 
D)  3.88. 
A)  2.59. 
B)  2.74. 
C)  2.98. 
D)  3.88.

An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is likely to indicate that

Please refer to Table 4-3 for the following questions. Table 4-3 Emery Corporation Balance Sheet Income Statement -Based on the information in Table 4-3,the operating profit margin is

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 acid-test ratio is

Financial analysis

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 times interest earned ratio is

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,assuming that no preferred dividends were paid,the return on common equity is

Asset efficiency ratios for Fischer,Inc.are given in the table below.Based on this information,Fischer,Inc.'s fixed asset turnover ratio is likely to be ________.

Return on equity is driven by (1)the spread between the operating return on assets and the interest rate,and (2)changes in the debt ratio.

Which of the following statements concerning Economic Value Added (EVA)is MOST correct?

When comparing a firm to its peers,why is it difficult to determine the industry to which the firm belongs? Why should you be careful when comparing a firm with industry norms?

Apollo Corp.reported the following balance sheet: Apollo Corp.'s current ratio is

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

An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is likely to indicate that

Please refer to Table 4-3 for the following questions. Table 4-3 Emery Corporation Balance Sheet Income Statement -Based on the information in Table 4-3,the operating profit margin is

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 acid-test ratio is

Financial analysis

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 times interest earned ratio is

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,assuming that no preferred dividends were paid,the return on common equity is

Asset efficiency ratios for Fischer,Inc.are given in the table below.Based on this information,Fischer,Inc.'s fixed asset turnover ratio is likely to be ________.

Return on equity is driven by (1)the spread between the operating return on assets and the interest rate,and (2)changes in the debt ratio.

Which of the following statements concerning Economic Value Added (EVA)is MOST correct?

When comparing a firm to its peers,why is it difficult to determine the industry to which the firm belongs? Why should you be careful when comparing a firm with industry norms?

Apollo Corp.reported the following balance sheet: Apollo Corp.'s current ratio is

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