Exam 4: Evaluating a Firms Financial Performance

Please refer to Table 4-7 for the following question. Table 4-7 Hokie Corporation Comparative Balance Sheet For the Years Ending December 31, 2009 and 2010 (Millions of Dollars) Hokie had net income of $28 million for 2010 and paid total cash dividends of $20 million to their common stockholders. -Calculate the following 2010 financial ratios of Hokie Corporation using the information given in Table 4-7: i.current ratio ii.acid test ratio iii.debt ratio iv.return on total assets v.return on common equity

Accounting information is used in financial ratio analysis because it is theoretically the best data to guide financial decision-making.

Please refer to Table 4-2 for the following questions. Table 4-2 Drummond Company Balance Sheet -Based on the information in Table 4-2,the inventory turnover ratio is

Please refer to Table 4-4 for the following questions. Table 4-4 Wes Donnell, Inc. Balance Sheet Wes Donnell, Inc. Income Statement For the year ended December 31, 2010 -In addition to the information contained in Table 4-4,you know that the current ratio for 2010 is 4 and that the corporation paid $11,600 in dividends in 2010.What is Wes Donnell's inventory turnover for 2010?

The current ratio of a firm would equal its quick ratio whenever

A firm that wants to know if it has enough cash to meet its bills would be most likely to use which kind of ratio?

Discuss five limitations to ratio analysis.

Trend analysis is the forecasting of the firm's financial ratios for a future time period by using its own ratios from previous periods.

Please refer to Table 4-2 for the following questions. Table 4-2 Drummond Company Balance Sheet -Based on the information in Table 4-2,the acid-test ratio is

Please refer to Table 4-3 for the following questions. Table 4-3 Emery Corporation -Based on the information in Table 4-3,the operating profit margin is

When comparing inventory turnover ratios,other things being equal,

Please refer to Table 4-1 for the following questions. Table 4-1 Stewart Company Balance Sheet -Based on the information in Table 4-1,the OROA is

Please refer to Table 4-5 for the following questions. Table 4-5 Yen Inc. Balance Sheet Yen Inc. Income Statement For the year ended December 31, 2010 -Based on the information contained in Tables 4-5,what was Yen's return on common equity for 2010?

The balance sheet and income statement for Becker,Becker & Becker is presented below. a.Compute the following ratios: Current ratio,Acid test ratio,Debt ratio,Total asset turnover,Operating profit margin,Return on total investments,Times interest earned,Inventory turnover. b.All other things equal,compute the dollar amount of sales needed to achieve an 18% return on total assets for the coming year. c.Given Becker's inventory turnover ratio,find a way of computing the current level of inventory given this ratio and assuming the current level of inventories is unknown.Set up but do not solve.

Company A and Company B have the same gross profit margin and the same total asset turnover,but company A has a higher return on equity.This may result from

Solid State,Inc.has a total equity of $560,000; sales of $2,250,000; total assets of $995,000; and current liabilities of $310,000.What is Solid State's debt ratio?

Please refer to Table 4-7 for the following question. Table 4-7 Hokie Corporation Comparative Balance Sheet For the Years Ending December 31, 2009 and 2010 (Millions of Dollars) Hokie had net income of $28 million for 2010 and paid total cash dividends of $20 million to their common stockholders. -Certainty Corp.had total sales of $1,200,000 in 2010 (80 percent of its sales are credit).The company's gross profit margin is 25 percent,its ending inventory is $150,000,and its accounts receivable balance is $90,000.What additional amount of cash could the firm have generated if it had increased its inventory turnover ratio to 9.0 and reduced its average collection period to 28.21875 days?

The goal of most financial managers is to reduce the amount of long-term debt to zero,thus maximizing shareholder wealth.

Please refer to Table 4-5 for the following questions. Table 4-5 Yen Inc. Balance Sheet Yen Inc. Income Statement For the year ended December 31, 2010 -Based on the information contained in Tables 4-5,what was Yen's operating profit margin for 2010?

Please refer to Table 4-2 for the following questions. Table 4-2 Drummond Company Balance Sheet -Based on the information in Table 4-2,the average collection period is