Question 1

The method of evaluating the firm's performance over time is known as:

Accepted Answer

A) trend analysis 
B) cross-sectional analysis 
C) industry comparative analysis 
D) Due Pont analysis 
A) trend analysis 
B) cross-sectional analysis 
C) industry comparative analysis 
D) Due Pont analysis

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) sales commissions 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) sales commissions expense 
E) it is sensitive to all of the above variables

Question 3

Assume a firm is developing,manufacturing,and selling a basic software package at $500 per copy.Raw materials and direct labor total $200 per copy.Fixed costs are $250,000.If the firm sells 5,000 units per year,what will be the operating profit?

Accepted Answer

A) $1,250,000 
B) $1,500,000 
C) $2,250,000 
D) $2,500,000 
A) $1,250,000 
B) $1,500,000 
C) $2,250,000 
D) $2,500,000

Question 4

The market value ratios indicate the financial markets' assessment of the value of a firm's securities.

Accepted Answer

A) True 
 B)False

Question 5

Management of current assets does not involve which one of the following areas?

Accepted Answer

A) cash and marketable securities 
B) accounts receivable 
C) inventory 
D) plant and equipment 
A) cash and marketable securities 
B) accounts receivable 
C) inventory 
D) plant and equipment

Question 6

Asset management ratios indicate the ability to meet short-term obligations to creditors as they come due.

Accepted Answer

A) True 
 B)False

Question 7

Which item is not included in the calculation for both the quick ratio and the current ratio?

Accepted Answer

A) accounts receivable 
B) current assets 
C) inventories 
D) current liabilities 
A) accounts receivable 
B) current assets 
C) inventories 
D) current liabilities

Question 8

Which of the following statements is most correct?

Accepted Answer

A) larger values of the equity multiplier imply a greater use of leverage by the firm. 
B) the receivables turnover is computed by dividing annual sales by the year-end accounts receivables. 
C) the operating return on assets is computed as the earnings before interest and taxes divided by total assets. 
D) all the above statements are correct. 
A) larger values of the equity multiplier imply a greater use of leverage by the firm. 
B) the receivables turnover is computed by dividing annual sales by the year-end accounts receivables. 
C) the operating return on assets is computed as the earnings before interest and taxes divided by total assets. 
D) all the above statements are correct.

Question 9

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have

Accepted Answer

A) excessive current assets. 
B) excessive inventory. 
C) excessive accounts receivable. 
D) excessive debt. 
E) none of the above 
A) excessive current assets. 
B) excessive inventory. 
C) excessive accounts receivable. 
D) excessive debt. 
E) none of the above

Question 10

The break-even quantity is inversely related to the level of a firm's variable costs.

Accepted Answer

A) True 
 B)False

Question 11

If the total asset turnover of a firm is 1.5,total assets are $500,000,and net income is $50,000,what is the profit margin?

Accepted Answer

A) 1% 
B) 5% 
C) 6.7% 
D) not enough information available 
A) 1% 
B) 5% 
C) 6.7% 
D) not enough information available

Question 12

Internally generated funds for financing new asset investments come from common stock issues.

Accepted Answer

A) True 
 B)False

Question 13

Financial leverage ratios indicate the extent to which borrowed funds are used to finance assets.

Accepted Answer

A) True 
 B)False

Question 14

An analyst should be careful when conducting ratio analysis to ensure that

Accepted Answer

A) the overall performance of the firm is judged on a single ratio. 
B) the dates of the financial statements being compared are different. 
C) audited statements are not being used. 
D) different accounting procedures are used. 
E) none of the above 
A) the overall performance of the firm is judged on a single ratio. 
B) the dates of the financial statements being compared are different. 
C) audited statements are not being used. 
D) different accounting procedures are used. 
E) none of the above

Question 15

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) sell an additional $230,000 of common stock. 
E) all of the above 
A) repurchase common stock totaling $230,000. 
B) arrange for a loan of $230,000. 
C) do nothing;the balance sheet balances. 
D) sell an additional $230,000 of common stock. 
E) all of the above

Question 16

The operating profit margin is calculated as the firm's net income divided by net sales.

Accepted Answer

A) True 
 B)False

Question 17

The method of calculating return on assets which highlights the importance of sales,profit margin,and asset turnover is known as:

Accepted Answer

A) the Gordon model 
B) cost-volume profit analysis 
C) DuPont analysis 
D) break-even analysis 
A) the Gordon model 
B) cost-volume profit analysis 
C) DuPont analysis 
D) break-even analysis

Question 18

A firm's efficiency in utilizing resources at its disposal in generating sales would be measured by profitability ratios.

Accepted Answer

A) True 
 B)False

Question 19

An analyst should be careful when conducting ratio analysis to ensure that

Accepted Answer

A) the overall performance of the firm is not judged on a single ratio. 
B) the dates of the financial statements being compared are the same. 
C) audited statements are being used. 
D) the same accounting procedures were used. 
E) all of the above 
A) the overall performance of the firm is not judged on a single ratio. 
B) the dates of the financial statements being compared are the same. 
C) audited statements are being used. 
D) the same accounting procedures were used. 
E) all of the above

Question 20

Potential creditors of a firm might analyze financial statements to gauge the firm's ability to make timely payments of interest and principal.

Accepted Answer

A) True 
 B)False

The method of evaluating the firm's performance over time is known as:

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

Assume a firm is developing,manufacturing,and selling a basic software package at $500 per copy.Raw materials and direct labor total $200 per copy.Fixed costs are $250,000.If the firm sells 5,000 units per year,what will be the operating profit?

The market value ratios indicate the financial markets' assessment of the value of a firm's securities.

Management of current assets does not involve which one of the following areas?

Asset management ratios indicate the ability to meet short-term obligations to creditors as they come due.

Which item is not included in the calculation for both the quick ratio and the current ratio?

Which of the following statements is most correct?

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have

The break-even quantity is inversely related to the level of a firm's variable costs.

If the total asset turnover of a firm is 1.5,total assets are $500,000,and net income is $50,000,what is the profit margin?

Internally generated funds for financing new asset investments come from common stock issues.

Financial leverage ratios indicate the extent to which borrowed funds are used to finance assets.

An analyst should be careful when conducting ratio analysis to ensure that

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

The operating profit margin is calculated as the firm's net income divided by net sales.

The method of calculating return on assets which highlights the importance of sales,profit margin,and asset turnover is known as:

A firm's efficiency in utilizing resources at its disposal in generating sales would be measured by profitability ratios.

An analyst should be careful when conducting ratio analysis to ensure that

Potential creditors of a firm might analyze financial statements to gauge the firm's ability to make timely payments of interest and principal.

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

The method of evaluating the firm's performance over time is known as:

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

Assume a firm is developing,manufacturing,and selling a basic software package at $500 per copy.Raw materials and direct labor total $200 per copy.Fixed costs are $250,000.If the firm sells 5,000 units per year,what will be the operating profit?

The market value ratios indicate the financial markets' assessment of the value of a firm's securities.

Management of current assets does not involve which one of the following areas?

Asset management ratios indicate the ability to meet short-term obligations to creditors as they come due.

Which item is not included in the calculation for both the quick ratio and the current ratio?

Which of the following statements is most correct?

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have

The break-even quantity is inversely related to the level of a firm's variable costs.

If the total asset turnover of a firm is 1.5,total assets are $500,000,and net income is $50,000,what is the profit margin?

Internally generated funds for financing new asset investments come from common stock issues.

Financial leverage ratios indicate the extent to which borrowed funds are used to finance assets.

An analyst should be careful when conducting ratio analysis to ensure that

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

The operating profit margin is calculated as the firm's net income divided by net sales.

The method of calculating return on assets which highlights the importance of sales,profit margin,and asset turnover is known as:

A firm's efficiency in utilizing resources at its disposal in generating sales would be measured by profitability ratios.

An analyst should be careful when conducting ratio analysis to ensure that

Potential creditors of a firm might analyze financial statements to gauge the firm's ability to make timely payments of interest and principal.

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