Question 1

The net profit margin is an example of a market value ratio.

Accepted Answer

A) True 
 B)False

Question 2

The quick ratio is a stricter measure of liquidity compared to the current ratio.

Accepted Answer

A) True 
 B)False

Question 3

The contribution margin represents contribution of each unit sold that first goes toward paying fixed costs.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is false?

Accepted Answer

A) the price-to-book ratio measures the market's value of the firm relative to balance sheet equity. 
B) the equity multiplier ratio is calculated as owners' equity divided by total assets. 
C) the degree of operating leverage measures the sensitivity of operating income to changes in the level of output. 
D) all the above statements are correct. 
A) the price-to-book ratio measures the market's value of the firm relative to balance sheet equity. 
B) the equity multiplier ratio is calculated as owners' equity divided by total assets. 
C) the degree of operating leverage measures the sensitivity of operating income to changes in the level of output. 
D) all the above statements are correct.

Question 5

The interest coverage ratio indicates the ability of a firm to meet its contractual obligations for interest,leases,and debt principal repayments out of its operating income.

Accepted Answer

A) True 
 B)False

Question 6

Trend or time series analysis is used to compare the performance of different firms at the same point in time.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a variable cost?

Accepted Answer

A) direct materials 
B) direct labor 
C) delivery costs 
D) rent 
E) all of the above are variable costs 
A) direct materials 
B) direct labor 
C) delivery costs 
D) rent 
E) all of the above are variable costs

Question 8

The extent to which assets are used to support sales is indicated by which of the following ratios:

Accepted Answer

A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) profitability ratios 
A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) profitability ratios

Question 9

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

Accepted Answer

A) increase the break-even point 
B) decrease the break-even point 
C) have no impact on the break-even point 
D) not enough information given 
A) increase the break-even point 
B) decrease the break-even point 
C) have no impact on the break-even point 
D) not enough information given

Question 10

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) arrange for a loan of $230,000. 
C) do nothing;the balance sheet balances. 
D) invest in marketable securities totaling $230,000. 
A) repurchase common stock totaling $230,000. 
B) arrange for a loan of $230,000. 
C) do nothing;the balance sheet balances. 
D) invest in marketable securities totaling $230,000.

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) 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 12

Which of the following statements is false?

Accepted Answer

A) time series analysis evaluates a firm's performance over time. 
B) industry comparative analysis compares a firm's ratios against average ratios against average ratios for other companies in the industry. 
C) the average collection period is calculated as the year-end accounts receivable divided by the net sales. 
D) all the above statements are correct. 
A) time series analysis evaluates a firm's performance over time. 
B) industry comparative analysis compares a firm's ratios against average ratios against average ratios for other companies in the industry. 
C) the average collection period is calculated as the year-end accounts receivable divided by the net sales. 
D) all the above statements are correct.

Question 13

If a firm's sales are $2,000,000,its cost of goods sold is $1,500,000,and its total assets are $1,000,000,what is total asset turnover?

Accepted Answer

A) 2.0 times 
B) 1.5 times 
C) 0.5 times 
D) .67 times 
A) 2.0 times 
B) 1.5 times 
C) 0.5 times 
D) .67 times

Question 14

A firm has fixed operating costs of $10,000,the sale price per unit of its product is $25,and its variable cost per unit is $15.The firm's operating breakeven point in units is ________ and its breakeven point in dollars is ________.

Accepted Answer

A) 250;$6,250 
B) 400;$10,000 
C) 667;$16,675 
D) 1,000;$25,000 
A) 250;$6,250 
B) 400;$10,000 
C) 667;$16,675 
D) 1,000;$25,000

Question 15

A firm with total asset turnover lower than the industry average may have

Accepted Answer

A) excessive debt. 
B) excessive cost of goods sold. 
C) insufficient sales. 
D) insufficient fixed assets. 
E) none of the above 
A) excessive debt. 
B) excessive cost of goods sold. 
C) insufficient sales. 
D) insufficient fixed assets. 
E) none of the above

Question 16

Cross-sectional analysis is used to evaluate a firm's performance over time.

Accepted Answer

A) True 
 B)False

Question 17

_____________ costs are a function of quantity sold,not time.

Accepted Answer

A) fixed 
B) semi-variable 
C) operating 
D) variable 
E) none of the above 
A) fixed 
B) semi-variable 
C) operating 
D) variable 
E) none of the above

Question 18

The price-to-book ratio measures the market's value of the firm relative to balance sheet equity.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following is not a basic element or component of the percentage of sales approach to long-term financial planning?

Accepted Answer

A) asset investment requirements 
B) internally generated financing 
C) spontaneous increases in current liabilities 
D) automatic increases in cash inflows 
A) asset investment requirements 
B) internally generated financing 
C) spontaneous increases in current liabilities 
D) automatic increases in cash inflows

Question 20

Which one of the following ratios indicates the average number of days that sales are outstanding?

Accepted Answer

A) average payment period 
B) average collection period 
C) quick ratio 
D) interest coverage 
A) average payment period 
B) average collection period 
C) quick ratio 
D) interest coverage

The net profit margin is an example of a market value ratio.

The quick ratio is a stricter measure of liquidity compared to the current ratio.

The contribution margin represents contribution of each unit sold that first goes toward paying fixed costs.

Which of the following statements is false?

The interest coverage ratio indicates the ability of a firm to meet its contractual obligations for interest,leases,and debt principal repayments out of its operating income.

Trend or time series analysis is used to compare the performance of different firms at the same point in time.

Which of the following is not a variable cost?

The extent to which assets are used to support sales is indicated by which of the following ratios:

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

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

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

Which of the following statements is false?

If a firm's sales are $2,000,000,its cost of goods sold is $1,500,000,and its total assets are $1,000,000,what is total asset turnover?

A firm has fixed operating costs of $10,000,the sale price per unit of its product is $25,and its variable cost per unit is $15.The firm's operating breakeven point in units is and its breakeven point in dollars is .

A firm with total asset turnover lower than the industry average may have

Cross-sectional analysis is used to evaluate a firm's performance over time.

_____________ costs are a function of quantity sold,not time.

The price-to-book ratio measures the market's value of the firm relative to balance sheet equity.

Which one of the following is not a basic element or component of the percentage of sales approach to long-term financial planning?

Which one of the following ratios indicates the average number of days that sales are outstanding?

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

Filters

Exam 14: Financial Analysis and Long-Term Financial Planning

The net profit margin is an example of a market value ratio.

The quick ratio is a stricter measure of liquidity compared to the current ratio.

The contribution margin represents contribution of each unit sold that first goes toward paying fixed costs.

Which of the following statements is false?

The interest coverage ratio indicates the ability of a firm to meet its contractual obligations for interest,leases,and debt principal repayments out of its operating income.

Trend or time series analysis is used to compare the performance of different firms at the same point in time.

Which of the following is not a variable cost?

The extent to which assets are used to support sales is indicated by which of the following ratios:

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

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

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

Which of the following statements is false?

If a firm's sales are $2,000,000,its cost of goods sold is $1,500,000,and its total assets are $1,000,000,what is total asset turnover?

A firm has fixed operating costs of $10,000,the sale price per unit of its product is $25,and its variable cost per unit is $15.The firm's operating breakeven point in units is ________ and its breakeven point in dollars is ________.

A firm with total asset turnover lower than the industry average may have

Cross-sectional analysis is used to evaluate a firm's performance over time.

_____________ costs are a function of quantity sold,not time.

The price-to-book ratio measures the market's value of the firm relative to balance sheet equity.

Which one of the following is not a basic element or component of the percentage of sales approach to long-term financial planning?

Which one of the following ratios indicates the average number of days that sales are outstanding?

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

Filters

A firm has fixed operating costs of $10,000,the sale price per unit of its product is $25,and its variable cost per unit is $15.The firm's operating breakeven point in units is and its breakeven point in dollars is .