Question 1

Which ratio calculates the amount of sales generated by each $1 of debt and equity invested in the firm?

Accepted Answer

A) Total asset turnover 
B) Return on equity 
C) Return on assets 
D) Equity multiplier 
E) DuPont identity 
A) Total asset turnover 
B) Return on equity 
C) Return on assets 
D) Equity multiplier 
E) DuPont identity

Question 2

Cellar Wines has a debt-equity ratio of 0.54,sales of $728,700,net income of $94,900,and total debt of $382,000.What is the return on equity?

Accepted Answer

A) 16.67% 
B) 9)05% 
C) 10.75% 
D) 15.50% 
E) 13.42% 
A) 16.67% 
B) 9)05% 
C) 10.75% 
D) 15.50% 
E) 13.42%

Question 3

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.   What is the return on equity?

Accepted Answer

A) 46.36% 
B) 42.74% 
C) 25.12% 
D) 18.42% 
E) 6)67% 
A) 46.36% 
B) 42.74% 
C) 25.12% 
D) 18.42% 
E) 6)67%

Question 4

A decrease in which one of the following accounts increases a firm's current ratio as well as its quick ratio?

Accepted Answer

A) Accounts payable 
B) Cash 
C) Accounts receivable 
D) Inventory 
E) Fixed assets 
A) Accounts payable 
B) Cash 
C) Accounts receivable 
D) Inventory 
E) Fixed assets

Question 5

Which portion of the DuPont identity measures the financial leverage employed by a firm?

Accepted Answer

A) Both the profit margin and the equity multiplier 
B) Equity multiplier 
C) Total asset turnover 
D) Both the capital intensity ratio and the total asset turnover 
E) Both the capital intensity ratio and the debt-equity ratio 
A) Both the profit margin and the equity multiplier 
B) Equity multiplier 
C) Total asset turnover 
D) Both the capital intensity ratio and the total asset turnover 
E) Both the capital intensity ratio and the debt-equity ratio

Question 6

Ratio analysis works best when evaluating the financial statements of two firms

Accepted Answer

A) in the same industry but located in different countries. 
B) of differing sizes in the same industry. 
C) with one being in a single line of business while the other is a conglomerate. 
D) of the same size in differing industries. 
E) when both are conglomerates with varying lines of business. 
A) in the same industry but located in different countries. 
B) of differing sizes in the same industry. 
C) with one being in a single line of business while the other is a conglomerate. 
D) of the same size in differing industries. 
E) when both are conglomerates with varying lines of business.

Question 7

Assume J.K.Lumber increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the

Accepted Answer

A) equity multiplier will decrease. 
B) return on assets will decrease. 
C) profit margin will decline. 
D) return on equity will increase. 
E) total asset turnover will increase. 
A) equity multiplier will decrease. 
B) return on assets will decrease. 
C) profit margin will decline. 
D) return on equity will increase. 
E) total asset turnover will increase.

Question 8

The return on equity can be calculated as

Accepted Answer

A) Profit margin × 1 / Total asset turnover × Equity multiplier 
B) Return on assets × Profit margin 
C) Profit margin × Capital intensity ratio × Debt-equity ratio 
D) Profit margin × 1 / Equity multiplier × (1 + Debt-equity ratio) 
E) Return on assets × (1 + Debt-equity ratio) 
A) Profit margin × 1 / Total asset turnover × Equity multiplier 
B) Return on assets × Profit margin 
C) Profit margin × Capital intensity ratio × Debt-equity ratio 
D) Profit margin × 1 / Equity multiplier × (1 + Debt-equity ratio) 
E) Return on assets × (1 + Debt-equity ratio)

Question 9

Which cash coverage ratio would a lender prefer its borrower have?

Accepted Answer

A) −1.5 
B) −0.5 
C) 0 
D) 0)5 
E) 1)5 
A) −1.5 
B) −0.5 
C) 0 
D) 0)5 
E) 1)5

Question 10

Southern Markets has a profit margin of 4.2 percent,a return on assets of 9.7 percent,and a debt-equity ratio of 0.51.What is the return on equity?

Accepted Answer

A) 18.33% 
B) 13.49% 
C) 11.28% 
D) 14.65% 
E) 16.16% 
A) 18.33% 
B) 13.49% 
C) 11.28% 
D) 14.65% 
E) 16.16%

Question 11

Assume a firm is operating at full capacity.Which one of these accounts is least apt to vary directly with sales?

Accepted Answer

A) Inventory 
B) Cash 
C) Long-term debt 
D) Accounts payable 
E) Fixed assets 
A) Inventory 
B) Cash 
C) Long-term debt 
D) Accounts payable 
E) Fixed assets

Question 12

A firm has sales of $215,600,costs of $124,800,interest paid of $3,600,and depreciation of $11,400.The tax rate is 34 percent.What is the value of the cash coverage ratio?

Accepted Answer

A) 24.22 times 
B) 17.06 times 
C) 21.06 times 
D) 25.22 times 
E) 16.47 times 
A) 24.22 times 
B) 17.06 times 
C) 21.06 times 
D) 25.22 times 
E) 16.47 times

Question 13

A firm has a total debt ratio of 0.47.This means the firm has $0.47 in debt for every

Accepted Answer

A) $)53 in equity. 
B) $1.47 in total assets. 
C) $1.53 in total assets. 
D) $1 in total equity. 
E) $1.47 in total equity. 
A) $)53 in equity. 
B) $1.47 in total assets. 
C) $1.53 in total assets. 
D) $1 in total equity. 
E) $1.47 in total equity.

Question 14

If a firm decreases its operating costs,all else constant,then

Accepted Answer

A) the profit margin increases while the cash coverage ratio decreases. 
B) the return on assets increases while the return on equity decreases. 
C) both the return on assets and the return on equity increase. 
D) both the profit margin and the equity multiplier increase. 
E) the total asset turnover rate decreases while the profit margin increases. 
A) the profit margin increases while the cash coverage ratio decreases. 
B) the return on assets increases while the return on equity decreases. 
C) both the return on assets and the return on equity increase. 
D) both the profit margin and the equity multiplier increase. 
E) the total asset turnover rate decreases while the profit margin increases.

Question 15

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

Accepted Answer

A) equity multiplier. 
B) return on equity. 
C) price-earnings ratio. 
D) DuPont identity. 
E) return on assets. 
A) equity multiplier. 
B) return on equity. 
C) price-earnings ratio. 
D) DuPont identity. 
E) return on assets.

Question 16

Firms with high enterprise value multiples are most apt to have

Accepted Answer

A) high growth opportunities. 
B) low market-to-book ratios. 
C) low profit margins. 
D) low inventory turnover rates. 
E) a low price-earnings ratio. 
A) high growth opportunities. 
B) low market-to-book ratios. 
C) low profit margins. 
D) low inventory turnover rates. 
E) a low price-earnings ratio.

Question 17

Patti's has net income of $87,300,a price-earnings ratio of 11.8,and earnings per share of $1.13.How many shares of stock are outstanding?

Accepted Answer

A) 6,547 shares 
B) 38,690 shares 
C) 77,257 shares 
D) 93,590 shares 
E) 8,750 shares 
A) 6,547 shares 
B) 38,690 shares 
C) 77,257 shares 
D) 93,590 shares 
E) 8,750 shares

Question 18

Ratios that measure how efficiently a firm uses its assets to generate sales are known as ________ ratios.

Accepted Answer

A) profitability 
B) long-term solvency 
C) short-term solvency 
D) utilization 
E) market value 
A) profitability 
B) long-term solvency 
C) short-term solvency 
D) utilization 
E) market value

Question 19

Yesterday,ABC stock sold for $28 a share.Today,the overall market fell,and ABC stock is now selling for $22 a share.Which of these ratios for ABC will be affected by this market reaction? Assume all else is held constant.

Accepted Answer

A) Enterprise value multiple and price-earnings ratio 
B) Earnings per share and price-earnings ratio 
C) Return on equity and return on assets 
D) Return on book equity and market-to-book ratio 
E) Price-earnings ratio and return on book equity 
A) Enterprise value multiple and price-earnings ratio 
B) Earnings per share and price-earnings ratio 
C) Return on equity and return on assets 
D) Return on book equity and market-to-book ratio 
E) Price-earnings ratio and return on book equity

Question 20

Which of the following represent problems encountered when comparing the financial statements of one firm with those of another firm? I.The firms may have unrelated lines of business.
II)The operations of the two firms may vary geographically.
III)The firms may use differing accounting methods.
IV)The two firms may be regulated differently.

Accepted Answer

A) I and II only 
B) II and III only 
C) I,III,and IV only 
D) I,II,and III only 
E) I,II,III,and IV 
A) I and II only 
B) II and III only 
C) I,III,and IV only 
D) I,II,and III only 
E) I,II,III,and IV

Which ratio calculates the amount of sales generated by each $1 of debt and equity invested in the firm?

Cellar Wines has a debt-equity ratio of 0.54,sales of $728,700,net income of $94,900,and total debt of $382,000.What is the return on equity?

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the return on equity?

A decrease in which one of the following accounts increases a firm's current ratio as well as its quick ratio?

Which portion of the DuPont identity measures the financial leverage employed by a firm?

Ratio analysis works best when evaluating the financial statements of two firms

Assume J.K.Lumber increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the

The return on equity can be calculated as

Which cash coverage ratio would a lender prefer its borrower have?

Southern Markets has a profit margin of 4.2 percent,a return on assets of 9.7 percent,and a debt-equity ratio of 0.51.What is the return on equity?

Assume a firm is operating at full capacity.Which one of these accounts is least apt to vary directly with sales?

A firm has sales of $215,600,costs of $124,800,interest paid of $3,600,and depreciation of $11,400.The tax rate is 34 percent.What is the value of the cash coverage ratio?

A firm has a total debt ratio of 0.47.This means the firm has $0.47 in debt for every

If a firm decreases its operating costs,all else constant,then

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

Firms with high enterprise value multiples are most apt to have

Patti's has net income of $87,300,a price-earnings ratio of 11.8,and earnings per share of $1.13.How many shares of stock are outstanding?

Ratios that measure how efficiently a firm uses its assets to generate sales are known as ________ ratios.

Yesterday,ABC stock sold for $28 a share.Today,the overall market fell,and ABC stock is now selling for $22 a share.Which of these ratios for ABC will be affected by this market reaction? Assume all else is held constant.

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Risk Amcq Return: Lessons From Market History

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

Filters

Exam 3: Financial Statements Analysis Amcq Financial Models

Which ratio calculates the amount of sales generated by each $1 of debt and equity invested in the firm?

Cellar Wines has a debt-equity ratio of 0.54,sales of $728,700,net income of $94,900,and total debt of $382,000.What is the return on equity?

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the return on equity?

A decrease in which one of the following accounts increases a firm's current ratio as well as its quick ratio?

Which portion of the DuPont identity measures the financial leverage employed by a firm?

Ratio analysis works best when evaluating the financial statements of two firms

Assume J.K.Lumber increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the

The return on equity can be calculated as

Which cash coverage ratio would a lender prefer its borrower have?

Southern Markets has a profit margin of 4.2 percent,a return on assets of 9.7 percent,and a debt-equity ratio of 0.51.What is the return on equity?

Assume a firm is operating at full capacity.Which one of these accounts is least apt to vary directly with sales?

A firm has sales of $215,600,costs of $124,800,interest paid of $3,600,and depreciation of $11,400.The tax rate is 34 percent.What is the value of the cash coverage ratio?

A firm has a total debt ratio of 0.47.This means the firm has $0.47 in debt for every

If a firm decreases its operating costs,all else constant,then

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

Firms with high enterprise value multiples are most apt to have

Patti's has net income of $87,300,a price-earnings ratio of 11.8,and earnings per share of $1.13.How many shares of stock are outstanding?

Ratios that measure how efficiently a firm uses its assets to generate sales are known as ________ ratios.

Yesterday,ABC stock sold for $28 a share.Today,the overall market fell,and ABC stock is now selling for $22 a share.Which of these ratios for ABC will be affected by this market reaction? Assume all else is held constant.

Introduction to Corporate Finance

Financial Statements AMCQ Cash Flow

Discounted Cash Flow Valuation

Interest Rates AMCQ Bomcq Valuation

Stock Valuation

Net Present Value AMCQ Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, AMCQ Capital Budgeting

Risk Amcq Return: Lessons From Market History

Return Amcq Risk: the Capital Asset Pricing Model Capm

Risk, cost of Capital, AMCQ Valuation

Efficient Capital Markets Amcq Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividemcqs AMCQ Other Payouts

Options Amcq Corporate Finance

Short-Term Finance Amcq Planning

Raising Capital

International Corporate Finance

Mergers Amcq Acquisitions Web Only

Filters