Exam 4: Measuring Corporate Performance

Balsco's balance sheet shows total assets of $238,000 and total liabilities of $107,000. The firm has 55,000 shares of stock outstanding that sell for $11 a share. What is amount of market value added?

A corporation declares $25 million in net income, $1 million in preferred stock dividends, and $7 million in common stock dividends. By how much will shareholders' equity increase on the balance sheet?

Efficiency ratios:

Value Corp. recently reported earnings of $2 per share and each of its 50,000 shares is currently selling for $20. The firm's book equity is $600,000. Given this information, answer the following about the firm's market-value ratios: a. Calculate the firm's price-to-earnings (P/E) and market-to-book ratios. b. If the P/E ratio is said to compare favorably to that of the industry average, speculate on what could account for this fact.

When Tri-C Corp. compares its ratios to industry averages, it has a higher current ratio, an average quick ratio, and a lower inventory turnover. What might you assume about Tri-C?

Other things equal, an increase in average accounts receivable will increase a firm's return on assets.

What are the standard measures of a firm's leverage, liquidity, efficiency, and profitability? What is the significance of each of these measures?

Which of the following statements is correct for a firm in which depreciation expense exceeds EBIT? The firm:

What is the market price of a share of stock for a firm with 100,000 shares outstanding, a book value of equity of $3,000,000, and a market-to-book ratio of 3?

Which one of the following may be the best measure of company performance?

A company has announced $50,000 in net income after paying taxes of $26,000 and interest of $20,000. It intends to pay $17,000 of net income as dividends. Its assets have averaged $600,000 over the past year, during which its total debt ratio has averaged 40%. Given this information, calculate the ROA and ROE.

The reduction in value over time of intangible assets is known as amortization.

In the past year, TVG had revenues of $3 million, cost of goods sold of $2.5 million, and depreciation expense of $200,000. The firm has a single issue of debt outstanding with a face value of $1million, market value of $.92 million, and a coupon rate of 8%. What is the firm's times interest earned ratio?

A total debt ratio of .35:

Which one of these statements is correct?

Which one of the following changes will provide an increase (if only in the short-run) in a firm's ROE?

If a firm's inventory level of $10,000 represents 30 days' sales, what is the annual cost of goods sold? What is the inventory turnover ratio?

If a company has a healthy current ratio but a significantly lower quick ratio, then you can assume that:

Which of the following is the least effective measure of operating performance?

If a firm has a debt-equity ratio of .45, long-term debt of $500, and equity of $2,000, then: