Question 1

Which of the following ratios is calculated to help determine the liquidity of a firm?

Accepted Answer

A) Inventory turnover ratio 
B) Quick ratio 
C) Total assets turnover ratio 
D) Debt ratio 
E) Net profit ratio 
A) Inventory turnover ratio 
B) Quick ratio 
C) Total assets turnover ratio 
D) Debt ratio 
E) Net profit ratio

Question 2

A firm's total equity is $10 million and total liabilities is $5 million. During the year, its sales equaled to $75 million. Based on the given information, the total assets turnover ratio of the firm is:

Accepted Answer

A) 10.5 times. 
B) 13 times. 
C) 15 times. 
D) 7.5 times. 
E) 5 times. 
A) 10.5 times. 
B) 13 times. 
C) 15 times. 
D) 7.5 times. 
E) 5 times.

Question 3

Determine the increase or decrease in cash for Rinky Supply Company for last year, given the following information. (Assume no other changes occurred during the past year.) ​
Dividend payment                                           $25
Increase in accounts receivables                     $50
Increase in notes payable                                $30
Decrease in accounts payable                         $20
Increase in accrued wages and taxes              $15
Increase in inventories                                    $35

Addition to retained earnings                                     $5

Accepted Answer

A) -$50 
B) +$40 
C) -$80 
D) +$20 
E) -$30 
A) -$50 
B) +$40 
C) -$80 
D) +$20 
E) -$30

Question 4

_____ is an example of a long-term investment of a firm.

Accepted Answer

A) Retained earnings 
B) Equipment 
C) Accounts receivable 
D) Common stock 
E) Long-term bonds 
A) Retained earnings 
B) Equipment 
C) Accounts receivable 
D) Common stock 
E) Long-term bonds

Question 5

Suppose a firm has a growth rate equal to 8 percent, return on assets (ROA) of 10 percent, a debt ratio of 20 percent, and a current stock price of $36. The firm's return on equity (ROE) is:

Accepted Answer

A) 14.0%. 
B) 12.5%. 
C) 15.0%. 
D) 2.5%. 
E) 13.5%. 
A) 14.0%. 
B) 12.5%. 
C) 15.0%. 
D) 2.5%. 
E) 13.5%.

Question 6

Which of the following is an example of a firm's long-term debt?

Accepted Answer

A) Common stock 
B) Retained earnings 
C) Accounts payable 
D) Corporate bonds 
E) Accounts receivable 
A) Common stock 
B) Retained earnings 
C) Accounts payable 
D) Corporate bonds 
E) Accounts receivable

Question 7

Which of the following is an example of a noncash item reported in the income statement of a firm?

Accepted Answer

A) Taxes 
B) Dividends 
C) Interest 
D) Depreciation 
E) Net sales 
A) Taxes 
B) Dividends 
C) Interest 
D) Depreciation 
E) Net sales

Question 8

Which of the following accounts contains the actual money that can be spent by a firm?

Accepted Answer

A) Accounts Receivable 
B) Notes Payable 
C) Net Worth 
D) Inventories 
E) Cash and Equivalents 
A) Accounts Receivable 
B) Notes Payable 
C) Net Worth 
D) Inventories 
E) Cash and Equivalents

Question 9

Which of the following is considered a use of cash in a cash flow statement?

Accepted Answer

A) Increase in accrued wages 
B) Increase in common stock 
C) Decrease in accounts receivable 
D) Decrease in inventory 
E) Increase in fixed assets 
A) Increase in accrued wages 
B) Increase in common stock 
C) Decrease in accounts receivable 
D) Decrease in inventory 
E) Increase in fixed assets

Question 10

Which of the following was originally created to develop and approve a set of common International Financial Reporting Standards (IFRS)?

Accepted Answer

A) International Accounting Standards Board (IAS
B)  
B) Securities and Exchange Commission (SE
C)  
C) Generally Accepted Accounting Principles (GAAP) 
D) International Federation of Accountants 
E) International Accounting Standards Committee 
A) International Accounting Standards Board (IAS
B)  
B) Securities and Exchange Commission (SE
C)  
C) Generally Accepted Accounting Principles (GAAP) 
D) International Federation of Accountants 
E) International Accounting Standards Committee

Question 11

Which of the following financial statements includes information about a firm's assets, equity, and liabilities at a specific point in time?

Accepted Answer

A) Income statement 
B) Cash flow statement 
C) Balance sheet 
D) Statement of retained earnings 
E) Statement of changes in long-term financing 
A) Income statement 
B) Cash flow statement 
C) Balance sheet 
D) Statement of retained earnings 
E) Statement of changes in long-term financing

Question 12

The net fixed assets of Auburn Media Ltd. is $850 million. The sales of the firm is $1,420 million. The firm's fixed assets turnover ratio is:

Accepted Answer

A) 1.35 times. 
B) 2.42 times. 
C) 1.67 times. 
D) 2.8 times. 
E) 3.45 times. 
A) 1.35 times. 
B) 2.42 times. 
C) 1.67 times. 
D) 2.8 times. 
E) 3.45 times.

Question 13

Using the information below for WAM Inc., the market value per share is:
Earnings after interest and taxes = $200,000
Earnings per share = $2.00
Stockholders' equity = $2,000,000
Market/Book ratio = 0.20

Accepted Answer

A) $20.00. 
B) $8.00. 
C) $4.00. 
D) $2.00. 
E) $1.00. 
A) $20.00. 
B) $8.00. 
C) $4.00. 
D) $2.00. 
E) $1.00.

Question 14

Different accounting practices will not have an impact on the comparative ratio analyses of different firms.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following financial statements is included in the annual reports of a company?

Accepted Answer

A) Statement of changes in long-term financing 
B) Fund flow statement 
C) Statement of principles 
D) Proxy statement 
E) Statement of cash flows 
A) Statement of changes in long-term financing 
B) Fund flow statement 
C) Statement of principles 
D) Proxy statement 
E) Statement of cash flows

Question 16

When generating financial statements, the Securities and Exchange Commission (SEC) allows publicly traded foreign companies to use the International Financial Reporting Standards (IFRS) rather than the Generally Accepted Accounting Principles (GAAP) if IFRS is the accounting system used in their home country.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following provides information about a firm's performance during the past year and also provides information regarding new developments that will affect the future performance of the firm?

Accepted Answer

A) Articles of incorporation 
B) The annual report 
C) Proxy statements 
D) A DuPont chart 
E) A memorandum of understanding 
A) Articles of incorporation 
B) The annual report 
C) Proxy statements 
D) A DuPont chart 
E) A memorandum of understanding

Question 18

If a firm's existing quick ratio is 1.2, and all other variables remain unchanged, the quick ratio can be increased by:

Accepted Answer

A) repayment of a loan. 
B) purchase of fixed assets using a loan. 
C) receiving interest income. 
D) collecting accounts receivable. 
E) purchase of fixed assets for cash. 
A) repayment of a loan. 
B) purchase of fixed assets using a loan. 
C) receiving interest income. 
D) collecting accounts receivable. 
E) purchase of fixed assets for cash.

Question 19

If a firm earns a net profit of $100,000 on sales of $2,000,000, its net profit margin is:

Accepted Answer

A) 5%. 
B) 10%. 
C) 15%. 
D) 3.5%. 
E) 1.5%. 
A) 5%. 
B) 10%. 
C) 15%. 
D) 3.5%. 
E) 1.5%.

Question 20

A firm's net income as reported on its income statement is also known as the firm's _____.

Accepted Answer

A) operating cash flow 
B) net cash flow 
C) noncash income 
D) accounting profit 
E) net sales 
A) operating cash flow 
B) net cash flow 
C) noncash income 
D) accounting profit 
E) net sales

Which of the following ratios is calculated to help determine the liquidity of a firm?

A firm's total equity is $10 million and total liabilities is $5 million. During the year, its sales equaled to $75 million. Based on the given information, the total assets turnover ratio of the firm is:

_____ is an example of a long-term investment of a firm.

Suppose a firm has a growth rate equal to 8 percent, return on assets (ROA) of 10 percent, a debt ratio of 20 percent, and a current stock price of $36. The firm's return on equity (ROE) is:

Which of the following is an example of a firm's long-term debt?

Which of the following is an example of a noncash item reported in the income statement of a firm?

Which of the following accounts contains the actual money that can be spent by a firm?

Which of the following is considered a use of cash in a cash flow statement?

Which of the following was originally created to develop and approve a set of common International Financial Reporting Standards (IFRS)?

Which of the following financial statements includes information about a firm's assets, equity, and liabilities at a specific point in time?

The net fixed assets of Auburn Media Ltd. is $850 million. The sales of the firm is $1,420 million. The firm's fixed assets turnover ratio is:

Using the information below for WAM Inc., the market value per share is: Earnings after interest and taxes = $200,000 Earnings per share = $2.00 Stockholders' equity = $2,000,000 Market/Book ratio = 0.20

Different accounting practices will not have an impact on the comparative ratio analyses of different firms.

Which of the following financial statements is included in the annual reports of a company?

Which of the following provides information about a firm's performance during the past year and also provides information regarding new developments that will affect the future performance of the firm?

If a firm's existing quick ratio is 1.2, and all other variables remain unchanged, the quick ratio can be increased by:

If a firm earns a net profit of $100,000 on sales of $2,000,000, its net profit margin is:

A firm's net income as reported on its income statement is also known as the firm's _____.

An Overview of Managerial Finance

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debt Characteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Financing Liabilities

Managing Short-Term Assets

Financial Planning and Control

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Exam 2: Analysis of Financial Statements

Which of the following ratios is calculated to help determine the liquidity of a firm?

A firm's total equity is $10 million and total liabilities is $5 million. During the year, its sales equaled to $75 million. Based on the given information, the total assets turnover ratio of the firm is:

_____ is an example of a long-term investment of a firm.

Suppose a firm has a growth rate equal to 8 percent, return on assets (ROA) of 10 percent, a debt ratio of 20 percent, and a current stock price of $36. The firm's return on equity (ROE) is:

Which of the following is an example of a firm's long-term debt?

Which of the following is an example of a noncash item reported in the income statement of a firm?

Which of the following accounts contains the actual money that can be spent by a firm?

Which of the following is considered a use of cash in a cash flow statement?

Which of the following was originally created to develop and approve a set of common International Financial Reporting Standards (IFRS)?

Which of the following financial statements includes information about a firm's assets, equity, and liabilities at a specific point in time?

The net fixed assets of Auburn Media Ltd. is $850 million. The sales of the firm is $1,420 million. The firm's fixed assets turnover ratio is:

Using the information below for WAM Inc., the market value per share is: Earnings after interest and taxes = $200,000 Earnings per share = $2.00 Stockholders' equity = $2,000,000 Market/Book ratio = 0.20

Different accounting practices will not have an impact on the comparative ratio analyses of different firms.

Which of the following financial statements is included in the annual reports of a company?

Which of the following provides information about a firm's performance during the past year and also provides information regarding new developments that will affect the future performance of the firm?

If a firm's existing quick ratio is 1.2, and all other variables remain unchanged, the quick ratio can be increased by:

If a firm earns a net profit of $100,000 on sales of $2,000,000, its net profit margin is:

A firm's net income as reported on its income statement is also known as the firm's _____.

An Overview of Managerial Finance

The Financial Environment: Markets, Institutions, and Investment Banking

Time Value of Money

The Cost of Money Interest Rates

Bonds Debt Characteristics and Valuation

Stocks Equity Characteristics and Valuation

Risk and Rates of Return

Capital Budgeting Techniques

Project Cash Flows and Risk

The Cost of Capital

Capital Structure

Distribution of Retained Earnings: Dividends and Stock Repurchases

Managing Short-Term Financing Liabilities

Managing Short-Term Assets

Financial Planning and Control

Filters