Exam 14: Financial Analysis and Long-Term Financial Planning

Financial analysis is designed to cover four areas or dimensions of the firm.Which one of the following does not belong to these four areas?

Given the following financial data: net income/sales = 6%; sales/total assets = 3.5; debt/total assets = 30%.The return on total assets is:

Which of the following statements about liquidity ratios is true?

Using the DuPont system of analysis and holding other factors constant, an increase in financial leverage will result in ________ in the return on equity.

All other things being equal, a decrease in the contribution margin for a firm would:

A cross-sectional analysis would be used to evaluate a firm's performance over time.

The price/earnings ratio (P/E) is calculated as:

Ratio analysis is a financial technique that involves dividing various financial statements numbers into one another.

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

The ability of a firm to meet its short-term debt obligations as they come due is indicated by which of the following ratios:

A firm with a total asset turnover lower than the industry standard and a current ratio which meets the industry standard may have None of the above clone of prior item.

The operating break-even sales level is sensitive to all of the following variables except:

All other things being equal, a decrease in the selling price of a product for a firm would:

Which of the following statements is false?

A high price-to-book value ratio would tend to indicate that investors are more optimistic about the market value of firm's asset, and its managers' abilities.

Net working capital indicates the percentage of current liabilities to current assets.

Which one of the following financial statements reports a firm's assets and the claims on assets?

The quick ratio is a stricter measure of liquidity compared to the current ratio.

An analyst should be careful when conducting ratio analysis to ensure that

The interest coverage ratio indicates the ability of a firm to meet its contractual obligations for interest, leases, and debt principal repayments out of its operating income.