Question 1

If Apex, Inc. has an ROE = 10 percent, equity multiplier = 3, and profit margin of 5 percent, what is the total asset turnover ratio?

Accepted Answer

A) 0.0600 
B) 0.0667 
C) 0.1667 
D) 0.6667 
A) 0.0600 
B) 0.0667 
C) 0.1667 
D) 0.6667

Question 2

Which ratio measures a firm's ability to pay short-term obligations with its available cash and market securities?

Accepted Answer

A) cash 
B) current 
C) internal-growth 
D) quick or acid-test 
A) cash 
B) current 
C) internal-growth 
D) quick or acid-test

Question 3

Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2018. If the firm's total debt at year-end was $5 million, how much equity does Will's Wheels have?

Accepted Answer

A) $0.65 million 
B) $3.25 million 
C) $5 million 
D) $7.69 million 
A) $0.65 million 
B) $3.25 million 
C) $5 million 
D) $7.69 million

Question 4

Last year Poncho Villa Corporation had an ROA of 16 percent and a dividend payout ratio of 25 percent. What is the internal growth rate?

Accepted Answer

A) 1.19 percent 
B) 13.64 percent 
C) 25.40 percent 
D) 33.33 percent 
A) 1.19 percent 
B) 13.64 percent 
C) 25.40 percent 
D) 33.33 percent

Question 5

Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?

Accepted Answer

A) cross-section 
B) current 
C) internal-growth 
D) quick or acid-test 
A) cross-section 
B) current 
C) internal-growth 
D) quick or acid-test

Question 6

Which of the following will increase a firm's quick ratio assuming no other accounts change?

Accepted Answer

A) a reduction in accounts payable 
B) an increase in accounts receivable 
C) an increase in marketable securities 
D) all of these choices are correct. 
A) a reduction in accounts payable 
B) an increase in accounts receivable 
C) an increase in marketable securities 
D) all of these choices are correct.

Question 7

All of the following are users of financial ratios EXCEPT

Accepted Answer

A) managers. 
B) investors. 
C) analysts. 
D) auditors. 
A) managers. 
B) investors. 
C) analysts. 
D) auditors.

Question 8

CornProducts Corp. ended the year 2018 with an average collection period of 40 days. The firm's credit sales for 2011 were $9 million. What is the approximate year-end 2013 balance in accounts receivable for Corn Products?

Accepted Answer

A) $225,000 
B) $986,300 
C) $4,444,400 
D) $360,000,000 
A) $225,000 
B) $986,300 
C) $4,444,400 
D) $360,000,000

Question 9

You are considering investing in Totally Tire Services. You have been able to locate the following information on the firm: total assets = $50 million, accounts receivable = $10 million, ACP = 15 days, net income = $4.5 million, and debt-to-equity ratio = 0.75 times. What is the ROE for the firm?

Accepted Answer

A) 1.58 percent 
B) 9.00 percent 
C) 15.75 percent 
D) 28.81 percent 
A) 1.58 percent 
B) 9.00 percent 
C) 15.75 percent 
D) 28.81 percent

Question 10

Which of the following measures the number of days that the firm holds accounts payable before it has to extend cash to buy raw materials?

Accepted Answer

A) accounts receivable turnover 
B) average collection period 
C) average payment period 
D) accounts payable turnover 
A) accounts receivable turnover 
B) average collection period 
C) average payment period 
D) accounts payable turnover

Question 11

Calculate the times interest earned ratio for Paige's Purses, Inc. using the following information: sales = $50,000,000, cost of goods sold = $15,000,000, depreciation expense = $2,000,000, addition to retained earnings = $10,000,000, dividends per share = $1.10, tax rate = 30 percent, and number of shares of common stock outstanding = 10,000,000. Paige's Purses has no preferred stock outstanding.

Accepted Answer

A) 0.27 
B) 3.30 
C) 11.00 
D) 16.67 
A) 0.27 
B) 3.30 
C) 11.00 
D) 16.67

Question 12

An investor wanting large returns will be interested in companies that have

Accepted Answer

A) high ROAs. 
B) high ROEs. 
C) high current ratios. 
D) high times interest earned. 
A) high ROAs. 
B) high ROEs. 
C) high current ratios. 
D) high times interest earned.

Question 13

What is the debt ratio for a firm with an equity multiplier of 3.5?

Accepted Answer

A) 44.09 percent 
B) 58.51 percent 
C) 66.25 percent 
D) 71.43 percent 
A) 44.09 percent 
B) 58.51 percent 
C) 66.25 percent 
D) 71.43 percent

Question 14

Fancy Paws' year-end price on its common stock is $20. The firm has total assets of $40 million, the debt ratio is 40 percent, there is no preferred stock, and there are 2 million shares of common stock outstanding. Calculate the market-to-book ratio for Fancy Paws.

Accepted Answer

A) 0.47 
B) 1.67 
C) 8.00 
D) 10.00 
A) 0.47 
B) 1.67 
C) 8.00 
D) 10.00

Question 15

A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm's ROA and ROE?

Accepted Answer

A) ROA = 6.6 percent; ROE = 14.52 percent 
B) ROA = 7.2 percent; ROE = 15.84 percent 
C) ROA = 9.5 percent; ROE = 20.9 percent 
D) ROA = 8.1 percent; ROE = 17.82 percent 
A) ROA = 6.6 percent; ROE = 14.52 percent 
B) ROA = 7.2 percent; ROE = 15.84 percent 
C) ROA = 9.5 percent; ROE = 20.9 percent 
D) ROA = 8.1 percent; ROE = 17.82 percent

Question 16

A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent. If the total asset turnover is 3.4, what is the firm's profit margin?

Accepted Answer

A) 2.94 percent 
B) 3.86 percent 
C) 4.29 percent 
D) 5.67 percent 
A) 2.94 percent 
B) 3.86 percent 
C) 4.29 percent 
D) 5.67 percent

Question 17

Which of the following statements is correct?

Accepted Answer

A) A low average payment period and a high accounts payable turnover are a sign of good management. 
B) A high average payment period and a low accounts payable turnover are a sign of good management. 
C) A high average payment period and a high accounts payable turnover are a sign of good management. 
D) A low average payment period and a low accounts payable turnover are a sign of good management. 
A) A low average payment period and a high accounts payable turnover are a sign of good management. 
B) A high average payment period and a low accounts payable turnover are a sign of good management. 
C) A high average payment period and a high accounts payable turnover are a sign of good management. 
D) A low average payment period and a low accounts payable turnover are a sign of good management.

Question 18

A firm has EBIT of $1,000,000 and depreciation expense of $400,000. Fixed charges total $600,000. Interest expense totals $70,000. What is the firm's fixed-charge coverage ratio?

Accepted Answer

A) 1.00 times 
B) 1.67 times 
C) 2.33 times 
D) 2.45 times 
A) 1.00 times 
B) 1.67 times 
C) 2.33 times 
D) 2.45 times

Question 19

A firm reported year-end cost of goods sold of $10 million. It listed $2 million of inventory on its balance sheet. Using a 365-day year, how many days did the firm's inventory stay on the premises?

Accepted Answer

A) 73 days 
B) 20 days 
C) 18.25 days 
D) 2 days 
A) 73 days 
B) 20 days 
C) 18.25 days 
D) 2 days

Question 20

Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable?

Accepted Answer

A) asset management 
B) cash 
C) internal-growth 
D) quick or acid-test 
A) asset management 
B) cash 
C) internal-growth 
D) quick or acid-test

If Apex, Inc. has an ROE = 10 percent, equity multiplier = 3, and profit margin of 5 percent, what is the total asset turnover ratio?

Which ratio measures a firm's ability to pay short-term obligations with its available cash and market securities?

Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2018. If the firm's total debt at year-end was $5 million, how much equity does Will's Wheels have?

Last year Poncho Villa Corporation had an ROA of 16 percent and a dividend payout ratio of 25 percent. What is the internal growth rate?

Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?

Which of the following will increase a firm's quick ratio assuming no other accounts change?

All of the following are users of financial ratios EXCEPT

CornProducts Corp. ended the year 2018 with an average collection period of 40 days. The firm's credit sales for 2011 were $9 million. What is the approximate year-end 2013 balance in accounts receivable for Corn Products?

You are considering investing in Totally Tire Services. You have been able to locate the following information on the firm: total assets = $50 million, accounts receivable = $10 million, ACP = 15 days, net income = $4.5 million, and debt-to-equity ratio = 0.75 times. What is the ROE for the firm?

Which of the following measures the number of days that the firm holds accounts payable before it has to extend cash to buy raw materials?

An investor wanting large returns will be interested in companies that have

What is the debt ratio for a firm with an equity multiplier of 3.5?

Fancy Paws' year-end price on its common stock is $20. The firm has total assets of $40 million, the debt ratio is 40 percent, there is no preferred stock, and there are 2 million shares of common stock outstanding. Calculate the market-to-book ratio for Fancy Paws.

A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm's ROA and ROE?

A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent. If the total asset turnover is 3.4, what is the firm's profit margin?

Which of the following statements is correct?

A firm has EBIT of $1,000,000 and depreciation expense of $400,000. Fixed charges total $600,000. Interest expense totals $70,000. What is the firm's fixed-charge coverage ratio?

A firm reported year-end cost of goods sold of $10 million. It listed $2 million of inventory on its balance sheet. Using a 365-day year, how many days did the firm's inventory stay on the premises?

Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable?

Introduction to Financial Management

Reviewing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 3: Analyzing Financial Statements

If Apex, Inc. has an ROE = 10 percent, equity multiplier = 3, and profit margin of 5 percent, what is the total asset turnover ratio?

Which ratio measures a firm's ability to pay short-term obligations with its available cash and market securities?

Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2018. If the firm's total debt at year-end was $5 million, how much equity does Will's Wheels have?

Last year Poncho Villa Corporation had an ROA of 16 percent and a dividend payout ratio of 25 percent. What is the internal growth rate?

Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?

Which of the following will increase a firm's quick ratio assuming no other accounts change?

All of the following are users of financial ratios EXCEPT

CornProducts Corp. ended the year 2018 with an average collection period of 40 days. The firm's credit sales for 2011 were $9 million. What is the approximate year-end 2013 balance in accounts receivable for Corn Products?

You are considering investing in Totally Tire Services. You have been able to locate the following information on the firm: total assets = $50 million, accounts receivable = $10 million, ACP = 15 days, net income = $4.5 million, and debt-to-equity ratio = 0.75 times. What is the ROE for the firm?

Which of the following measures the number of days that the firm holds accounts payable before it has to extend cash to buy raw materials?

An investor wanting large returns will be interested in companies that have

What is the debt ratio for a firm with an equity multiplier of 3.5?

Fancy Paws' year-end price on its common stock is $20. The firm has total assets of $40 million, the debt ratio is 40 percent, there is no preferred stock, and there are 2 million shares of common stock outstanding. Calculate the market-to-book ratio for Fancy Paws.

A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm's ROA and ROE?

A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent. If the total asset turnover is 3.4, what is the firm's profit margin?

Which of the following statements is correct?

A firm has EBIT of $1,000,000 and depreciation expense of $400,000. Fixed charges total $600,000. Interest expense totals $70,000. What is the firm's fixed-charge coverage ratio?

A firm reported year-end cost of goods sold of $10 million. It listed $2 million of inventory on its balance sheet. Using a 365-day year, how many days did the firm's inventory stay on the premises?

Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable?

Introduction to Financial Management

Reviewing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters