Exam 4: Measuring Corporate Performance

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The board of directors is dissatisfied with last year's ROE of 15%.If the profit margin and asset turnover remain unchanged at 8% and 1.25,respectively,by how much must the total debt ratio increase to achieve 20% ROE?

(Essay)

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Question 101

ABC Corp.has an ROE of 20% and a current dividend payout ratio of 40%.Which of the following changes will allow its earnings to grow at a 15% rate?

(Multiple Choice)

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Question 102

Market value added is the same as economic value added.

(True/False)

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Question 103

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

(Multiple Choice)

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Question 104

XYZ Corp.has a profit margin of 7%,a debt burden of .8,and has financed two-thirds of its assets through equity.What asset turnover ratio is necessary to achieve an ROE of 18%?

(Multiple Choice)

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Question 105

The inventory turnover ratio times the average days in inventory equals 365.

(True/False)

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Question 106

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.

(Essay)

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Question 107

A times interest earned ratio of 5.0 indicates that the firm:

(Multiple Choice)

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Question 108

If a firm's total debt ratio is greater than .5,then:

(Multiple Choice)

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Question 109

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

(True/False)

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Question 110

A cash coverage ratio of less than one indicates:

(Multiple Choice)

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Question 111

A firm's quick ratio of .89 suggests that the firm:

(Multiple Choice)

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Question 112

Which of the following actions could improve a firm's current ratio if it is now less than 1.0?

(Multiple Choice)

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Question 113

What may make simple comparisons of financial ratios misleading?

(Essay)

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Question 114

What are the annual sales for a firm with $400,000 in debt,a total debt ratio of .4,and an asset turnover of 3.0?

(Multiple Choice)

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Question 115

The use of financial leverage will be detrimental to a firm's ROE if the:

(Multiple Choice)

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Question 116

What effect on the growth rate of earnings can be accomplished by decreasing the dividend payout ratio from 70% to 40% if the firm has an ROE of 20%?

(Multiple Choice)

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Question 117

The only measure of firm performance that accounts for cost of capital is:

(Multiple Choice)

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Question 118

Showing 101 - 118 of 118

Exam 4: Measuring Corporate Performance

The board of directors is dissatisfied with last year's ROE of 15%.If the profit margin and asset turnover remain unchanged at 8% and 1.25,respectively,by how much must the total debt ratio increase to achieve 20% ROE?

ABC Corp.has an ROE of 20% and a current dividend payout ratio of 40%.Which of the following changes will allow its earnings to grow at a 15% rate?

Market value added is the same as economic value added.

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

XYZ Corp.has a profit margin of 7%,a debt burden of .8,and has financed two-thirds of its assets through equity.What asset turnover ratio is necessary to achieve an ROE of 18%?

The inventory turnover ratio times the average days in inventory equals 365.

A times interest earned ratio of 5.0 indicates that the firm:

If a firm's total debt ratio is greater than .5,then:

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

A cash coverage ratio of less than one indicates:

A firm's quick ratio of .89 suggests that the firm:

Which of the following actions could improve a firm's current ratio if it is now less than 1.0?

What may make simple comparisons of financial ratios misleading?

What are the annual sales for a firm with $400,000 in debt,a total debt ratio of .4,and an asset turnover of 3.0?

The use of financial leverage will be detrimental to a firm's ROE if the:

What effect on the growth rate of earnings can be accomplished by decreasing the dividend payout ratio from 70% to 40% if the firm has an ROE of 20%?

The only measure of firm performance that accounts for cost of capital is:

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

Options

Risk Management

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