Question 1

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?

Accepted Answer

The answer of If a firm's inventory level of $10,000...

Question 2

Apex Corp.has current liabilities of $2 million,a current ratio of 3.0,a quick ratio of 2.0,and a cash ratio of .75.Given this information,answer the following about the firm's liquidity:
a.What is the value of inventory?
b.What is the value of receivables?
c.What will happen to each of the three ratios if $1 million in current liabilities is refunded with long-term debt?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Thus,all three ra

Question 3

A firm with zero net working capital has:

Accepted Answer

A)  no cash or marketable securities. 
B)  insufficient inventories. 
C)  excessive current liabilities. 
D)  a quick ratio of less than 1.0. 
A)  no cash or marketable securities. 
B)  insufficient inventories. 
C)  excessive current liabilities. 
D)  a quick ratio of less than 1.0.

Question 4

When will ROE = ROC?

Accepted Answer

A)  If the firm has equal debt and equity financing 
B)  If the firm has no interest payments on debt 
C)  If the value of the firm's assets exceed the value of its equity 
D)  ROE will never equal ROC 
A)  If the firm has equal debt and equity financing 
B)  If the firm has no interest payments on debt 
C)  If the value of the firm's assets exceed the value of its equity 
D)  ROE will never equal ROC

Question 5

After calculating a firm's financial ratios,in what manner might they be analyzed to assess the firm's performance?

Accepted Answer

In the primary analysis,it would be info

Question 6

Average daily expenses are $50.8 million.Average accounts payable are $3,743.5 million.The average number of days that it takes the company to pay its bills (the average payment delay)is therefore:

Accepted Answer

A)  63.7 days. 
B)  73.7 days. 
C)  83.7 days. 
D)  93.7 days. 
A)  63.7 days. 
B)  73.7 days. 
C)  83.7 days. 
D)  93.7 days.

Question 7

Receivables turnover ratio and asset turnover ratio are both efficiency ratios.

Accepted Answer

A) True 
 B)False

Question 8

The asset turnover ratio and inventory turnover ratio are both efficiency ratios.

Accepted Answer

A) True 
 B)False

Question 9

A deficiency of standard measures of liquidity is that the measures:

Accepted Answer

A)  ignore a firm's reserve borrowing capacity. 
B)  fail to include accounts receivable as an asset. 
C)  give inventories equal weighting in the quick ratio. 
D)  do not include the current portions of long-term debt. 
A)  ignore a firm's reserve borrowing capacity. 
B)  fail to include accounts receivable as an asset. 
C)  give inventories equal weighting in the quick ratio. 
D)  do not include the current portions of long-term debt.

Question 10

The use of debt in the firm's capital structure will increase ROE if the firm:

Accepted Answer

A)  has more debt than equity. 
B)  pays less in taxes than in interest. 
C)  earns a higher return than the rate paid on debt. 
D)  has a times interest earned greater than 1.0. 
A)  has more debt than equity. 
B)  pays less in taxes than in interest. 
C)  earns a higher return than the rate paid on debt. 
D)  has a times interest earned greater than 1.0.

Question 11

Calculate the dividend per share that is paid when the earnings per share are $6.00 and plowback ratio is 0.85:

Accepted Answer

A)  $0.51 
B)  $0.71 
C)  $0.90 
D)  $5.10 
A)  $0.51 
B)  $0.71 
C)  $0.90 
D)  $5.10

Question 12

Which of the following is most likely to result in a higher P/E ratio for a firm,other things equal?

Accepted Answer

A)  Lower growth rate in dividends 
B)  Reduction in the stock's required rate of return 
C)  Lower dividend yield 
D)  Lower stock price 
A)  Lower growth rate in dividends 
B)  Reduction in the stock's required rate of return 
C)  Lower dividend yield 
D)  Lower stock price

Question 13

A firm reports a net profit margin of 10.0% on sales of $3 million when ignoring the effects of financing.If taxes are $200,000,how much is EBIT?

Accepted Answer

A)  $100,000 
B)  $300,000 
C)  $500,000 
D)  $800,000 
A)  $100,000 
B)  $300,000 
C)  $500,000 
D)  $800,000

Question 14

How does the Du Pont formula help identify the determinants of the firm's return on its assets and equity?

Accepted Answer

The Du Pont system provides a useful way

Question 15

Which of the following statements is most likely correct for a firm with an average collection period of 90 days?

Accepted Answer

A)  Its average daily sales are low. 
B)  Its average daily sales are high. 
C)  Its current ratio will be high. 
D)  It is providing financing for approximately 25% of its annual sales. 
A)  Its average daily sales are low. 
B)  Its average daily sales are high. 
C)  Its current ratio will be high. 
D)  It is providing financing for approximately 25% of its annual sales.

Question 16

Measures of a firm's efficiency with respect to earnings include:

Accepted Answer

A)  Profit margin, ROA, P/E ratio, ROE. 
B)  Market-to-book, ROE, payout ratio. 
C)  Profit margin, ROA, ROE, payout ratio. 
D)  ROA, ROE, P/E ratio, payout ratio. 
A)  Profit margin, ROA, P/E ratio, ROE. 
B)  Market-to-book, ROE, payout ratio. 
C)  Profit margin, ROA, ROE, payout ratio. 
D)  ROA, ROE, P/E ratio, payout ratio.

Question 17

A total debt ratio of .35:

Accepted Answer

A)  indicates that the firm is financed with 35% long-term debt. 
B)  would exist if a firm had liabilities of $700 and assets of $2,000. 
C)  indicates that 35 cents of every dollar of capital is in the form of short-term debt. 
D)  indicates that 35 cents of every dollar of capital is in the form of long-term debt. 
A)  indicates that the firm is financed with 35% long-term debt. 
B)  would exist if a firm had liabilities of $700 and assets of $2,000. 
C)  indicates that 35 cents of every dollar of capital is in the form of short-term debt. 
D)  indicates that 35 cents of every dollar of capital is in the form of long-term debt.

Question 18

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

Accepted Answer

A)  ROC. 
B)  ROA. 
C)  ROE. 
D)  All of these are equally ineffective measures of operating performance. 
A)  ROC. 
B)  ROA. 
C)  ROE. 
D)  All of these are equally ineffective measures of operating performance.

Question 19

ROE is equal to ROA when the firm has no debt.

Accepted Answer

A) True 
 B)False

Question 20

If ROC is less than a firm's cost of capital,which of the following must be true?

Accepted Answer

A)  The firm's EVA is positive. 
B)  The firm's EVA is negative. 
C)  The firm's ROE is equal to zero. 
D)  The firm's ROE is negative. 
A)  The firm's EVA is positive. 
B)  The firm's EVA is negative. 
C)  The firm's ROE is equal to zero. 
D)  The firm's ROE is negative.

Exam 4: Measuring Corporate Performance

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?

A firm with zero net working capital has:

When will ROE = ROC?

After calculating a firm's financial ratios,in what manner might they be analyzed to assess the firm's performance?

Average daily expenses are $50.8 million.Average accounts payable are $3,743.5 million.The average number of days that it takes the company to pay its bills (the average payment delay)is therefore:

Receivables turnover ratio and asset turnover ratio are both efficiency ratios.

The asset turnover ratio and inventory turnover ratio are both efficiency ratios.

A deficiency of standard measures of liquidity is that the measures:

The use of debt in the firm's capital structure will increase ROE if the firm:

Calculate the dividend per share that is paid when the earnings per share are $6.00 and plowback ratio is 0.85:

Which of the following is most likely to result in a higher P/E ratio for a firm,other things equal?

A firm reports a net profit margin of 10.0% on sales of $3 million when ignoring the effects of financing.If taxes are $200,000,how much is EBIT?

How does the Du Pont formula help identify the determinants of the firm's return on its assets and equity?

Which of the following statements is most likely correct for a firm with an average collection period of 90 days?

Measures of a firm's efficiency with respect to earnings include:

A total debt ratio of .35:

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

ROE is equal to ROA when the firm has no debt.

If ROC is less than a firm's cost of capital,which of the following must be true?

Goals and Governance of the Corporation

Financial Markets and Institutions

Accounting and Finance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash-Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk,Return,and the Opportunity Cost of Capital

Risk,Return,and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing

How Corporations Raise Venture Capital and Issue Securities

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Risk, Return, and Capital Budgeting

Mergers, Acquisitions, and Corporate Control

International Financial Management

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Risk Management

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