Exam 5: Risk Analysis

All of the following typically drive firm-specific risks except:

All of the following are common industry risks faced by companies except:

When calculating the quick ratio,an analyst would include in the numerator cash,________________________________________,and receivables.

Market equity beta measures the covariability of a firm's returns with the returns of:

The source of risk related to interest rate changes and demographic changes is ____________________.

By adding the number of days that inventory is held to the number of days that accounts receivable is outstanding an analyst can calculate the number of days of _____________________________________________ the firm requires.

If a customer wanted to obtain bank financing which of the following will the bank inquire about before granting a loan?

Long-term ______________________________ represents the longer-term ability of the firm to generate cash internally or from external sources to satisfy plant capacity and debt repayment needs.

Below are various states of financial distres s: 1)defaulting on a principal payment on debt 2)restructuring debt 3)liquidating a firm 4)filing for bankruptcy 5)failing to make a required interest payment on time What is the order of increasing gravity that analysts typically consider when assessing credit risk and bankruptcy risk according to a continuum of financial distress?

Which of the following properly links the factors affecting a firm's ability to generate cash with its need to use cash in investing? a. Profitability of goods and services sold Working capital requirements b. Sales of existing plant assets Plant capacity requirements c. Borrowing capacity Debt service requirements d. Profitability of goods and services sold Debt service requirements

Short-term ____________________________ represents a firm's near-term ability to generate cash to service working capital needs and debt service requirements.

Common shareholders benefit with increasing proportions of debt in the capital structure as long as the firm maintains an excess of ____________________ over the after-tax cost of debt

The source of risk related to technology,regulation and availability of raw materials is ____________________.

The current risk-free rate of return in the economy is 6%.In addition,the market rate of return is currently 8.5%. A.Given this information,what would be the expected return on common stock for a company with a systemic risk level (Beta) of 1.3? Show your calculations. B.Describe systemic risk.

One criticism of the interest and fixed charges coverage ratios as measures of long-term solvency risk is that they use earnings rather than cash flows in the numerator.Detail how the interest coverage ratio and fixed charges coverage ratio are calculated.In addition,discuss why using earnings in the numerator is a problem and what method could be used to alleviate this problem.

Which of the following is not one of the three explanatory variables that determine a firm's market beta?

Mobile Company Mobile Company manufactures computer technology devices.Selected financial data for Mobile is presented below; use the information to answer the following questions: As of Dec. 31,2010 Dec. 31,2009 Cash and short-term investments \ 1,267,038 \ 616,604 Accounts Receivable (net) 490,816 665,828 Inventories 338,599 487,505 Prepaid Expenses and other current assets \underlind 291,915 Total Current Assets \ 2,388,964 \ 2,061,852 Current Liabilities Short-term borrowings \ 25,190 \ 38,108 Current portion of long-term debt 182,295 210,090 Accounts payable 296,307 334,247 Accrued liabilities 941,912 743,999 Income taxes payable Total Current Liabilities 1.648753 566237 $\text { Selected Income Statement Data - for the year ending December 31, 2010: }$ Net Sales \ 4,885,340 Cost of Goods Sold 2,542,35 Operating Income 733,54 Net Income 230,10 $\text { Selected Statement of Cash Flow Data - for the year ending December } 31,2010:$ Cash Flows from Operations \ 1.156,08 -Refer to the information for Mobile Company.Mobile's days accounts payable outstanding at the end of 2010 is:

Large current ratios indicate the availability of cash and near cash assets to repay ____________________ coming due within the next year.

All of the following are common domestic risks faced by companies except:

The operating cycle must not only generate cash to supply ________________________________________ needs,it must generate sufficient cash to service debt.