Question 1

A firm with total liabilities and owners' equity of $100,000 and net sales of $50,000 would have a total asset turnover of:

Accepted Answer

A) 100 
B) .50 
C) 2 
D) not enough information given 
A) 100 
B) .50 
C) 2 
D) not enough information given C

Question 2

The operating break-even sales level is sensitive to all of the following variables except:

Accepted Answer

A) fixed operating costs 
B) sales price per unit 
C) variable operating cost per unit 
D) interest expense 
E) it is sensitive to all of the above variables 
A) fixed operating costs 
B) sales price per unit 
C) variable operating cost per unit 
D) interest expense 
E) it is sensitive to all of the above variables D

Question 3

If a firm has sales of $100,total expenses (including interest and taxes)of $50,has a stock that is selling at $50 per share and has 10 share of stock outstanding,then the firm has a P/E ratio of:

Accepted Answer

A) 2.00 
B) 1.00 
C) 10.0 
D) 0.20 
A) 2.00 
B) 1.00 
C) 10.0 
D) 0.20 C

Question 4

A high price-to-book value ratio would tend to indicate that investors are more optimistic about the market value of firm's asset,and its managers' abilities.

Accepted Answer

A) True 
 B)False

Question 5

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be -$230,000.The firm should prepare to

Accepted Answer

A) repurchase common stock totaling $230,000. 
B) pay off an existing loan in the amount of $230,000. 
C) accumulate an additional $230,000 of cash on its books. 
D) invest in marketable securities totaling $230,000. 
E) all of the above 
A) repurchase common stock totaling $230,000. 
B) pay off an existing loan in the amount of $230,000. 
C) accumulate an additional $230,000 of cash on its books. 
D) invest in marketable securities totaling $230,000. 
E) all of the above

Question 6

Using the DuPont system of analysis and holding other factors constant,an increase in the net profit margin will result in ________ in the return on equity.

Accepted Answer

A) an increase 
B) a decrease 
C) no change 
D) an undetermined change 
A) an increase 
B) a decrease 
C) no change 
D) an undetermined change

Question 7

Find the net profit margin earnings before interest and taxes is $20,000,net income is $10,000,sales are $50,000,and total assets are $100,000.

Accepted Answer

A) 40% 
B) 20% 
C) 10% 
D) none of the above 
A) 40% 
B) 20% 
C) 10% 
D) none of the above

Question 8

Using the DuPont system of analysis and holding other factors constant,an increase in financial leverage will result in ________ in the return on equity.

Accepted Answer

A) an increase 
B) a decrease 
C) no change 
D) an undetermined change 
A) an increase 
B) a decrease 
C) no change 
D) an undetermined change

Question 9

Which one of the following is not a basic component of the DuPont method of ratio analysis?

Accepted Answer

A) profit margin 
B) total asset turnover 
C) equity multiplier 
D) liquidity margin 
A) profit margin 
B) total asset turnover 
C) equity multiplier 
D) liquidity margin

Question 10

Which of the following is not a variable cost?

Accepted Answer

A) CEO Salary 
B) rent 
C) mortgage payments 
D) property taxes 
E) none of the above are variable costs 
A) CEO Salary 
B) rent 
C) mortgage payments 
D) property taxes 
E) none of the above are variable costs

Question 11

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Accepted Answer

A) repurchase common stock totaling $230,000. 
B) pay off an existing loan in the amount of $230,000. 
C) do nothing;the balance sheet balances. 
D) invest in marketable securities totaling $230,000. 
E) none of the above 
A) repurchase common stock totaling $230,000. 
B) pay off an existing loan in the amount of $230,000. 
C) do nothing;the balance sheet balances. 
D) invest in marketable securities totaling $230,000. 
E) none of the above

Question 12

Given the following financial data: net income/sales = 6%;sales/total assets = 3.5;debt/total assets = 30%.The return on total assets is:

Accepted Answer

A) 15% 
B) 21% 
C) 30% 
D) not enough information available 
A) 15% 
B) 21% 
C) 30% 
D) not enough information available

Question 13

________ evidence of the existence of a problem or outstanding management performance is provided by ratio analysis.

Accepted Answer

A) Conclusive 
B) Inconclusive 
C) Complete 
D) Definitive 
E) all of the above 
A) Conclusive 
B) Inconclusive 
C) Complete 
D) Definitive 
E) all of the above

Question 14

In employing DuPont analysis,the user would break the return on total assets into the profit margin,total asset turnover,and an equity multiplier.

Accepted Answer

A) True 
 B)False

Question 15

Financial analysis is designed to cover four areas or dimensions of the firm.Which one of the following does not belong to these four areas?

Accepted Answer

A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) sources and uses of fund ratios 
A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) sources and uses of fund ratios

Question 16

The _______________ ratio is computed as earnings before interest and taxes divided by interest expense:

Accepted Answer

A) net profit margin 
B) fixed charge coverage 
C) total asset turnover 
D) interest coverage 
A) net profit margin 
B) fixed charge coverage 
C) total asset turnover 
D) interest coverage

Question 17

Sacramento Sandals (SS)has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information,the breakeven sales level in dollars is

Accepted Answer

A) $125,495 
B) $112,425 
C) $108,995 
D) none of the above 
A) $125,495 
B) $112,425 
C) $108,995 
D) none of the above

Question 18

The operating profit margin is calculated as the firms earnings before interest and taxes divided by net sales.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following financial statements reports a firm's assets and the claims on assets?

Accepted Answer

A) balance sheet 
B) income statement 
C) statement of changes in financial position 
D) cash flow statement 
A) balance sheet 
B) income statement 
C) statement of changes in financial position 
D) cash flow statement

Question 20

All other things being equal,an increase in the amount of debt for a firm would:

Accepted Answer

A) increase the degree of operating leverage 
B) decrease the degree of operating leverage 
C) have no impact on degree of operating leverage 
D) not enough information given 
A) increase the degree of operating leverage 
B) decrease the degree of operating leverage 
C) have no impact on degree of operating leverage 
D) not enough information given

A firm with total liabilities and owners' equity of $100,000 and net sales of $50,000 would have a total asset turnover of:

The operating break-even sales level is sensitive to all of the following variables except:

If a firm has sales of $100,total expenses (including interest and taxes)of $50,has a stock that is selling at $50 per share and has 10 share of stock outstanding,then the firm has a P/E ratio of:

A high price-to-book value ratio would tend to indicate that investors are more optimistic about the market value of firm's asset,and its managers' abilities.

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be -$230,000.The firm should prepare to

Using the DuPont system of analysis and holding other factors constant,an increase in the net profit margin will result in ________ in the return on equity.

Find the net profit margin earnings before interest and taxes is $20,000,net income is $10,000,sales are $50,000,and total assets are $100,000.

Using the DuPont system of analysis and holding other factors constant,an increase in financial leverage will result in ________ in the return on equity.

Which one of the following is not a basic component of the DuPont method of ratio analysis?

Which of the following is not a variable cost?

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Given the following financial data: net income/sales = 6%;sales/total assets = 3.5;debt/total assets = 30%.The return on total assets is:

________ evidence of the existence of a problem or outstanding management performance is provided by ratio analysis.

In employing DuPont analysis,the user would break the return on total assets into the profit margin,total asset turnover,and an equity multiplier.

Financial analysis is designed to cover four areas or dimensions of the firm.Which one of the following does not belong to these four areas?

The _______________ ratio is computed as earnings before interest and taxes divided by interest expense:

Sacramento Sandals (SS)has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information,the breakeven sales level in dollars is

The operating profit margin is calculated as the firms earnings before interest and taxes divided by net sales.

Which one of the following financial statements reports a firm's assets and the claims on assets?

All other things being equal,an increase in the amount of debt for a firm would:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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Exam 14: Financial Analysis and Long-Term Financial Planning

A firm with total liabilities and owners' equity of $100,000 and net sales of $50,000 would have a total asset turnover of:

The operating break-even sales level is sensitive to all of the following variables except:

If a firm has sales of $100,total expenses (including interest and taxes)of $50,has a stock that is selling at $50 per share and has 10 share of stock outstanding,then the firm has a P/E ratio of:

A high price-to-book value ratio would tend to indicate that investors are more optimistic about the market value of firm's asset,and its managers' abilities.

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be -$230,000.The firm should prepare to

Using the DuPont system of analysis and holding other factors constant,an increase in the net profit margin will result in ________ in the return on equity.

Find the net profit margin earnings before interest and taxes is $20,000,net income is $10,000,sales are $50,000,and total assets are $100,000.

Using the DuPont system of analysis and holding other factors constant,an increase in financial leverage will result in ________ in the return on equity.

Which one of the following is not a basic component of the DuPont method of ratio analysis?

Which of the following is not a variable cost?

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Given the following financial data: net income/sales = 6%;sales/total assets = 3.5;debt/total assets = 30%.The return on total assets is:

________ evidence of the existence of a problem or outstanding management performance is provided by ratio analysis.

In employing DuPont analysis,the user would break the return on total assets into the profit margin,total asset turnover,and an equity multiplier.

Financial analysis is designed to cover four areas or dimensions of the firm.Which one of the following does not belong to these four areas?

The _______________ ratio is computed as earnings before interest and taxes divided by interest expense:

Sacramento Sandals (SS)has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information,the breakeven sales level in dollars is

The operating profit margin is calculated as the firms earnings before interest and taxes divided by net sales.

Which one of the following financial statements reports a firm's assets and the claims on assets?

All other things being equal,an increase in the amount of debt for a firm would:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

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