Question 1

________ evidence of the existence of a problem or outstanding management performance is provided by ratio analysis.

Accepted Answer

A) Conclusive 
B) Inconclusive 
C) Complete 
D) Definitive 
E) all of the above 
A) Conclusive 
B) Inconclusive 
C) Complete 
D) Definitive 
E) all of the above

Question 2

Higher levels of fixed costs result in lower levels of operating leverage.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is most correct?

Accepted Answer

A) higher levels of fixed costs result in lower levels of operating leverage. 
B) higher variable costs result in larger contribution margin. 
C) higher fixed costs result in larger break-even quantity. 
D) each of the above statements is false. 
A) higher levels of fixed costs result in lower levels of operating leverage. 
B) higher variable costs result in larger contribution margin. 
C) higher fixed costs result in larger break-even quantity. 
D) each of the above statements is false.

Question 4

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Accepted Answer

A) repurchase common stock totaling $230,000. 
B) arrange for a loan of $230,000. 
C) do nothing; the balance sheet balances. 
D) invest in marketable securities totaling $230,000. 
A) repurchase common stock totaling $230,000. 
B) arrange for a loan of $230,000. 
C) do nothing; the balance sheet balances. 
D) invest in marketable securities totaling $230,000.

Question 5

Sacramento Sandals (SS) has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information, the breakeven sales level in dollars is None of the above clone of prior item.

Accepted Answer

A) $25,495 
B) $12,425 
C) $8,995 
D) none of the above 
A) $25,495 
B) $12,425 
C) $8,995 
D) none of the above

Question 6

If a firm has an after-tax profit margin of 5%, an asset turnover of 2.5 times, and no debt, the return on equity is:

Accepted Answer

A) 2% 
B) 8.5% 
C) 12.5% 
D) not enough information available 
A) 2% 
B) 8.5% 
C) 12.5% 
D) not enough information available

Question 7

Which of the following might be a source of industry information?

Accepted Answer

A) Dun and Bradstreet 
B) Risk Management Association 
C) the Federal Trade Commission 
D) none All of the above 
A) Dun and Bradstreet 
B) Risk Management Association 
C) the Federal Trade Commission 
D) none All of the above

Question 8

Break-even analysis is used to estimate how many units of products must be sold in order for the firm to have a reasonable profit.

Accepted Answer

A) True 
 B)False

Question 9

Assume a firm is developing, manufacturing, and selling a basic software package at $500 per copy.Raw materials and direct labor total $200 per copy.Fixed costs are $250,000.If the firm sells 5,000 units per year, what will be the operating profit?

Accepted Answer

A) 	$1,250,000 
B) 	$1,500,000 
C) 	$2,250,000 
D) 	$2,500,000 
A) 	$1,250,000 
B) 	$1,500,000 
C) 	$2,250,000 
D) 	$2,500,000

Question 10

A firm has fixed operating costs of $150,000, total sales of $1,500,000, and total variable costs of $1,275,000.With this data, theThe firm's operating breakeven point during the year, in dollars, is

Accepted Answer

A) $150,000 
B) $176,471 
C) $1,000,000 
D) $1,425,000 
A) $150,000 
B) $176,471 
C) $1,000,000 
D) $1,425,000

Question 11

If a firm’s inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

Accepted Answer

A) 	2 times 
B) 	3 times 
C) 	4 times 
D) 	5 times 
A) 	2 times 
B) 	3 times 
C) 	4 times 
D) 	5 times

Question 12

Asset management ratios do not measure which of the following:

Accepted Answer

A) productivity of fixed assets in terms of sales 
B) how current assets are used in the generation of sales 
C) how efficiently inventory is being managedearnings generated by efficient asset management 
D) all of the above are measured by asset management ratios 
A) productivity of fixed assets in terms of sales 
B) how current assets are used in the generation of sales 
C) how efficiently inventory is being managedearnings generated by efficient asset management 
D) all of the above are measured by asset management ratios

Question 13

The break-even quantity is inversely related to the level of a firm's variable costs.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is most correct?

Accepted Answer

A) larger values of the equity multiplier imply a greater use of leverage by the firm. 
B) the receivables turnover is computed by dividing annual sales by the year-end accounts receivables. 
C) the operating return on assets is computed as the earnings before interest and taxes divided by total assets. 
D) all the above statements are correct. 
A) larger values of the equity multiplier imply a greater use of leverage by the firm. 
B) the receivables turnover is computed by dividing annual sales by the year-end accounts receivables. 
C) the operating return on assets is computed as the earnings before interest and taxes divided by total assets. 
D) all the above statements are correct.

Question 15

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have

Accepted Answer

A) excessive fixed assets. 
B) excessive inventory. 
C) excessive accounts receivable. 
D) excessive debt. 
E) none of the above 
A) excessive fixed assets. 
B) excessive inventory. 
C) excessive accounts receivable. 
D) excessive debt. 
E) none of the above

Question 16

Internally generated funds for financing new asset investments come from common stock issues.

Accepted Answer

A) True 
 B)False

Question 17

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Accepted Answer

A) repurchase common stock totaling $230,000. 
B) pay off an existing loan in the amount of $230,000. 
C) do nothing; the balance sheet balances. 
D) invest in marketable securities totaling $230,000. 
E) none of the above 
A) repurchase common stock totaling $230,000. 
B) pay off an existing loan in the amount of $230,000. 
C) do nothing; the balance sheet balances. 
D) invest in marketable securities totaling $230,000. 
E) none of the above

Question 18

A firm with total asset turnover lower than the industry average may have

Accepted Answer

A) excessive debt. 
B) excessive cost of goods sold. 
C) insufficient sales. 
D) insufficient fixed assets. 
E) none of the above 
A) excessive debt. 
B) excessive cost of goods sold. 
C) insufficient sales. 
D) insufficient fixed assets. 
E) none of the above

Question 19

Which of the following is not a variable cost?

Accepted Answer

A) direct materials 
B) direct labor 
C) delivery costs 
D) commissions 
E) all of the above are variable costs 
A) direct materials 
B) direct labor 
C) delivery costs 
D) commissions 
E) all of the above are variable costs

Question 20

Financial planning begins with a sales forecast for one or more years.

Accepted Answer

A) True 
 B)False

________ evidence of the existence of a problem or outstanding management performance is provided by ratio analysis.

Higher levels of fixed costs result in lower levels of operating leverage.

Which of the following statements is most correct?

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Sacramento Sandals (SS) has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information, the breakeven sales level in dollars is None of the above clone of prior item.

If a firm has an after-tax profit margin of 5%, an asset turnover of 2.5 times, and no debt, the return on equity is:

Which of the following might be a source of industry information?

Break-even analysis is used to estimate how many units of products must be sold in order for the firm to have a reasonable profit.

Assume a firm is developing, manufacturing, and selling a basic software package at $500 per copy.Raw materials and direct labor total $200 per copy.Fixed costs are $250,000.If the firm sells 5,000 units per year, what will be the operating profit?

A firm has fixed operating costs of $150,000, total sales of $1,500,000, and total variable costs of $1,275,000.With this data, theThe firm's operating breakeven point during the year, in dollars, is

If a firm’s inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

Asset management ratios do not measure which of the following:

The break-even quantity is inversely related to the level of a firm's variable costs.

Which of the following statements is most correct?

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have

Internally generated funds for financing new asset investments come from common stock issues.

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

A firm with total asset turnover lower than the industry average may have

Which of the following is not a variable cost?

Financial planning begins with a sales forecast for one or more years.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 14: Financial Analysis and Long-Term Financial Planning

________ evidence of the existence of a problem or outstanding management performance is provided by ratio analysis.

Higher levels of fixed costs result in lower levels of operating leverage.

Which of the following statements is most correct?

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

Sacramento Sandals (SS) has fixed annual operating costs of $75,000.SS retails each pair of sandals for $14.99 each and the variable cost per pair is $4.99.Based on this information, the breakeven sales level in dollars is None of the above clone of prior item.

If a firm has an after-tax profit margin of 5%, an asset turnover of 2.5 times, and no debt, the return on equity is:

Which of the following might be a source of industry information?

Break-even analysis is used to estimate how many units of products must be sold in order for the firm to have a reasonable profit.

Assume a firm is developing, manufacturing, and selling a basic software package at $500 per copy.Raw materials and direct labor total $200 per copy.Fixed costs are $250,000.If the firm sells 5,000 units per year, what will be the operating profit?

A firm has fixed operating costs of $150,000, total sales of $1,500,000, and total variable costs of $1,275,000.With this data, theThe firm's operating breakeven point during the year, in dollars, is

If a firm’s inventories on hand are $200,000, its cost of goods sold is $600,000, and its sales are $800,000, what is the inventory turnover?

Asset management ratios do not measure which of the following:

The break-even quantity is inversely related to the level of a firm's variable costs.

Which of the following statements is most correct?

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have

Internally generated funds for financing new asset investments come from common stock issues.

Ningbo Shipping has prepared the coming year's pro forma balance sheet and has estimated that external financing required would be $230,000.The firm should prepare to

A firm with total asset turnover lower than the industry average may have

Which of the following is not a variable cost?

Financial planning begins with a sales forecast for one or more years.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters