Question 1

Which of the following groups of ratios primarily measure risk?

Accepted Answer

A)  liquidity, activity, and profitability 
B)  liquidity, profitability, and market 
C)  liquidity, activity, and debt 
D)  activity, debt, and profitability 
A)  liquidity, activity, and profitability 
B)  liquidity, profitability, and market 
C)  liquidity, activity, and debt 
D)  activity, debt, and profitability

Question 2

Nico Corporation has annual purchases of $300,000 and accounts payable of $30,000, then average purchases per day are ________ and the average payment period is ________.

Accepted Answer

A)  36.5; 821.9 
B)  36.0; 833.3 
C)  821.9; 36.5 
D)  833.3; 36.0 
A)  36.5; 821.9 
B)  36.0; 833.3 
C)  821.9; 36.5 
D)  833.3; 36.0

Question 3

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31, 2013   Balance Sheet
Dana Dairy Products
December 31, 2013  
-The return on equity for Dana Dairy Products for 2013 was ________. (See Table 3.2)

Accepted Answer

A)  0.6 percent 
B)  5.6 percent 
C)  0.9 percent 
D)  50 percent 
A)  0.6 percent 
B)  5.6 percent 
C)  0.9 percent 
D)  50 percent

Question 4

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31, 2013   Balance Sheet
Dana Dairy Products
December 31, 2013  
-The return on total assets for Dana Dairy Products for 2013 was ________. (See Table 3.2)

Accepted Answer

A)  0.9 percent 
B)  5.5 percent 
C)  25 percent 
D)  2.5 percent 
A)  0.9 percent 
B)  5.5 percent 
C)  25 percent 
D)  2.5 percent

Question 5

Current ratio provides a firm's ability to meet its long-term obligations.

Accepted Answer

A) True 
 B)False

Question 6

A ________ ratio is commonly used to assess owners' appraisal of the share value.

Accepted Answer

A)  debt 
B)  price/earnings 
C)  return on equity 
D)  return on total assets 
A)  debt 
B)  price/earnings 
C)  return on equity 
D)  return on total assets

Question 7

The president's letter, the first component of the stockholders' report, is the primary communication from management to a firm's employees.

Accepted Answer

A) True 
 B)False

Question 8

Publicly owned corporations with more than $5 million assets are required by the Securities and Exchange Commission (SEC) and individual state securities commissions to provide their stockholders with an annual stockholders' report.

Accepted Answer

A) True 
 B)False

Question 9

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31, 2013   Balance Sheet
Dana Dairy Products
December 31, 2013  
-Dana Dairy Products' gross profit margin was inferior to the industry standard. This may have resulted from ________. (See Table 3.2)

Accepted Answer

A)  a high sales price 
B)  the high cost of goods sold 
C)  excessive selling and administrative expenses 
D)  excessive interest expense 
A)  a high sales price 
B)  the high cost of goods sold 
C)  excessive selling and administrative expenses 
D)  excessive interest expense

Question 10

Return on total assets (ROA) measures the overall effectiveness of management in generating profits with its available assets.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a limitation of ratio analysis?

Accepted Answer

A)  Financial ratios cannot reveal certain specific aspects of a firm's financial position. 
B)  Ratios that reveal large deviations from the norm merely indicate the possibility of a problem. 
C)  It is difficult to access audited financial statements for ratio analysis. 
D)  Ratio analysis assumes that inflation has no effect on a firm's business. 
A)  Financial ratios cannot reveal certain specific aspects of a firm's financial position. 
B)  Ratios that reveal large deviations from the norm merely indicate the possibility of a problem. 
C)  It is difficult to access audited financial statements for ratio analysis. 
D)  Ratio analysis assumes that inflation has no effect on a firm's business.

Question 12

Table 3.1   Information (2013 values)
1. Sales totaled $110,000
2. The gross profit margin was 25 percent.
3. Inventory turnover was 3.0.
4. There are 360 days in the year.
5. The average collection period was 65 days.
6. The current ratio was 2.40.
7. The total asset turnover was 1.13.
8. The debt ratio was 53.8 percent.
-Net fixed assets for CEE in 2013 were ________. (See Table 3.1)

Accepted Answer

A)  $45,484 
B)  $48,975 
C)  $54,511 
D)  $69,341 
A)  $45,484 
B)  $48,975 
C)  $54,511 
D)  $69,341

Question 13

The Financial Accounting Standards Board (FASB) is the federal regulatory body that governs the sale and listing of securities.

Accepted Answer

A) True 
 B)False

Question 14

On December 31, 2014, Bradshaw Corporation had $485,000 as an ending balance for its retained earnings account. During 2015, the corporation declared a $3.50/share dividend to its stockholders. The company has 35,000 shares of common stock outstanding. When the books were closed for 2015 year end, the corporation had a final retained earnings balance of $565,000. What was the net profit earned by Bradshaw Corporation during 2015?

Accepted Answer

The answer of On December 31, 2014, Bradshaw Corporation had...

Question 15

Financial leverage multiplier is the ratio of ________.

Accepted Answer

A)  current assets to common stockholders' equity 
B)  total assets to common stockholders' equity 
C)  total assets to total debt 
D)  current assets to current liabilities 
A)  current assets to common stockholders' equity 
B)  total assets to common stockholders' equity 
C)  total assets to total debt 
D)  current assets to current liabilities

Question 16

The ________ represents a summary statement of a firm's financial position at a given point in time.

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  statement of retained earnings 
A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  statement of retained earnings

Question 17

Market ratios only measure the risk.

Accepted Answer

A) True 
 B)False

Question 18

Firm ABC had operating profits of $100,000, taxes of $17,000, interest expense of $34,000, and preferred dividends of $5,000. What was the firm's net profit after taxes?

Accepted Answer

A)  $66,000 
B)  $49,000 
C)  $44,000 
D)  $83,000 
A)  $66,000 
B)  $49,000 
C)  $44,000 
D)  $83,000

Question 19

A firm has a year-end retained earnings balance of $220,000 for 2014. The firm reported net profits after taxes of $50,000 and paid dividends of $30,000 in 2015. The firm's retained earnings balance at 2015 year end is ________.

Accepted Answer

A)  $240,000 
B)  $250,000 
C)  $270,000 
D)  $300,000 
A)  $240,000 
B)  $250,000 
C)  $270,000 
D)  $300,000

Question 20

Paid-in capital in excess of par represents the amount of proceeds ________.

Accepted Answer

A)  in deficit of the par value from the original sale of common stock 
B)  in excess of the par value from the original sale of common stock 
C)  in excess of the par value from the current value of common stock 
D)  in excess of the par value from the intrinsic value of common stock 
A)  in deficit of the par value from the original sale of common stock 
B)  in excess of the par value from the original sale of common stock 
C)  in excess of the par value from the current value of common stock 
D)  in excess of the par value from the intrinsic value of common stock

Which of the following groups of ratios primarily measure risk?

Nico Corporation has annual purchases of $300,000 and accounts payable of $30,000, then average purchases per day are and the average payment period is .

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -The return on equity for Dana Dairy Products for 2013 was ________. (See Table 3.2)

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -The return on total assets for Dana Dairy Products for 2013 was ________. (See Table 3.2)

Current ratio provides a firm's ability to meet its long-term obligations.

A ________ ratio is commonly used to assess owners' appraisal of the share value.

The president's letter, the first component of the stockholders' report, is the primary communication from management to a firm's employees.

Publicly owned corporations with more than $5 million assets are required by the Securities and Exchange Commission (SEC) and individual state securities commissions to provide their stockholders with an annual stockholders' report.

Return on total assets (ROA) measures the overall effectiveness of management in generating profits with its available assets.

Which of the following is a limitation of ratio analysis?

The Financial Accounting Standards Board (FASB) is the federal regulatory body that governs the sale and listing of securities.

Financial leverage multiplier is the ratio of ________.

The ________ represents a summary statement of a firm's financial position at a given point in time.

Market ratios only measure the risk.

Firm ABC had operating profits of $100,000, taxes of $17,000, interest expense of $34,000, and preferred dividends of $5,000. What was the firm's net profit after taxes?

A firm has a year-end retained earnings balance of $220,000 for 2014. The firm reported net profits after taxes of $50,000 and paid dividends of $30,000 in 2015. The firm's retained earnings balance at 2015 year end is ________.

Paid-in capital in excess of par represents the amount of proceeds ________.

The Role of Managerial Finance

The Financial Market Environment

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Exam 3: Financial Statements and Ratio Analysis

Which of the following groups of ratios primarily measure risk?

Nico Corporation has annual purchases of $300,000 and accounts payable of $30,000, then average purchases per day are ________ and the average payment period is ________.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -The return on equity for Dana Dairy Products for 2013 was ________. (See Table 3.2)

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Balance Sheet Dana Dairy Products December 31, 2013 -The return on total assets for Dana Dairy Products for 2013 was ________. (See Table 3.2)

Current ratio provides a firm's ability to meet its long-term obligations.

A ________ ratio is commonly used to assess owners' appraisal of the share value.

The president's letter, the first component of the stockholders' report, is the primary communication from management to a firm's employees.

Publicly owned corporations with more than $5 million assets are required by the Securities and Exchange Commission (SEC) and individual state securities commissions to provide their stockholders with an annual stockholders' report.

Return on total assets (ROA) measures the overall effectiveness of management in generating profits with its available assets.

Which of the following is a limitation of ratio analysis?

The Financial Accounting Standards Board (FASB) is the federal regulatory body that governs the sale and listing of securities.

Financial leverage multiplier is the ratio of ________.

The ________ represents a summary statement of a firm's financial position at a given point in time.

Market ratios only measure the risk.

Firm ABC had operating profits of $100,000, taxes of $17,000, interest expense of $34,000, and preferred dividends of $5,000. What was the firm's net profit after taxes?

A firm has a year-end retained earnings balance of $220,000 for 2014. The firm reported net profits after taxes of $50,000 and paid dividends of $30,000 in 2015. The firm's retained earnings balance at 2015 year end is ________.

Paid-in capital in excess of par represents the amount of proceeds ________.

The Role of Managerial Finance

The Financial Market Environment

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Nico Corporation has annual purchases of $300,000 and accounts payable of $30,000, then average purchases per day are and the average payment period is .