Question 1

Which of the following refer to ratios that measure the relationship between a firm's liquid (or current)assets and its current liabilities?

Accepted Answer

A) Cross-section 
B) Internal growth 
C) Liquidity 
D) Market value 
A) Cross-section 
B) Internal growth 
C) Liquidity 
D) Market value C

Question 2

Which ratio measures the number of dollars of operating earnings available to meet each dollar of interest obligations on the firm's debt?

Accepted Answer

A) Fixed charge coverage ratio 
B) Times interest earned 
C) Cash coverage ratio 
D) ROA 
A) Fixed charge coverage ratio 
B) Times interest earned 
C) Cash coverage ratio 
D) ROA B

Question 3

Which ratio measures the percentage of total assets financed by debt?

Accepted Answer

A) Debt 
B) Debt-to-equity 
C) Equity multiplier 
D) Liquidity 
A) Debt 
B) Debt-to-equity 
C) Equity multiplier 
D) Liquidity A

Question 4

A firm's year-end price on its common stock is $55.The firm has a profit margin of 6 percent,total assets of $75 million,a total asset turnover ratio of 0.9,no preferred stock,and 2.5 million shares of common stock outstanding.Calculate the PE ratio for the firm.

Accepted Answer

A) 16.94 times 
B) 17.98 times 
C) 24.16 times 
D) 33.95 times 
A) 16.94 times 
B) 17.98 times 
C) 24.16 times 
D) 33.95 times

Question 5

DuPont Analysis 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 6

A firm has an ROA of 12 percent and an ROE of 52 percent.What is the firm's equity multiplier?

Accepted Answer

A) 0.23 
B) 4.33 
C) 1.63 
D) 2.90 
A) 0.23 
B) 4.33 
C) 1.63 
D) 2.90

Question 7

Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 10 percent and a dividend payout ratio of 50 percent.What is the internal growth rate?

Accepted Answer

A) 1.00 percent 
B) 2.25 percent 
C) 5.26 percent 
D) 100.00 percent 
A) 1.00 percent 
B) 2.25 percent 
C) 5.26 percent 
D) 100.00 percent

Question 8

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 9

You are considering a stock investment in one of two firms (A and B),both of which operate in the same industry.A finances its $20 million in assets with $18 million in debt and $2 million in equity.B finances its $20 million in assets with $2 million in debt and $18 million in equity.Calculate the equity multiplier for the two firms.

Accepted Answer

A) Firm A: 15 times; Firm B: 1.00 times 
B) Firm A: 10 times; Firm B: 1.11 times 
C) Firm A: 10 times; Firm B: 9.99 times 
D) Firm A: 20 times; Firm B: 1.11 times 
A) Firm A: 15 times; Firm B: 1.00 times 
B) Firm A: 10 times; Firm B: 1.11 times 
C) Firm A: 10 times; Firm B: 9.99 times 
D) Firm A: 20 times; Firm B: 1.11 times

Question 10

Which of the following measures the operating return on the firm's assets,irrespective of financial leverage and taxes?

Accepted Answer

A) Basic earnings power ratio 
B) Profit margin 
C) Return on assets 
D) Return on equity 
A) Basic earnings power ratio 
B) Profit margin 
C) Return on assets 
D) Return on equity

Question 11

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 12

Liquidity Ratios You have the following information on Olivia's Bridle Shop: total liabilities and equity = $65 million,current liabilities = $10 million,inventory = $15 million,and quick ratio = 3 times.Using this information,what is the balance for fixed assets on Olivia's balance sheet?

Accepted Answer

A) $20m 
B) $40m 
C) $45m 
D) $135m 
A) $20m 
B) $40m 
C) $45m 
D) $135m

Question 13

Debt Management Ratios Tierre's Ts,Inc.reported a debt to equity ratio of 3 times at the end of 2013.If the firm's total assets at year-end are $15 million,how much of their assets is financed with equity?

Accepted Answer

A) $3.75m 
B) $5m 
C) $11.25m 
D) $45m 
A) $3.75m 
B) $5m 
C) $11.25m 
D) $45m

Question 14

Market Value Ratios Fancy Paws' year-end price on its common stock is $20.The firm has a profit margin of 12 percent,total assets of $20 million,a total asset turnover ratio of 0.5,no preferred stock,and there are 2 million shares of common stock outstanding.What is the PE ratio for Fancy Paws?

Accepted Answer

A) 3.33 
B) 8.33 
C) 10.00 
D) 33.33 
A) 3.33 
B) 8.33 
C) 10.00 
D) 33.33

Question 15

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 16

Which ratio assesses how efficiently a firm uses its fixed assets?

Accepted Answer

A) Capital intensity ratio 
B) Current ratio 
C) Average collection period 
D) Fixed asset turnover 
A) Capital intensity ratio 
B) Current ratio 
C) Average collection period 
D) Fixed asset turnover

Question 17

A firm reported an ROE of 19 percent.The firm's debt ratio was 45 percent,sales were $12 million,and the capital intensity ratio was 1.1 times.Calculate the net income for the firm.

Accepted Answer

A) 0.34 million 
B) 1.38 million 
C) 1.93 million 
D) 2.06 million 
A) 0.34 million 
B) 1.38 million 
C) 1.93 million 
D) 2.06 million

Question 18

Asset Management and Debt Management Ratios Use the following information to calculate current assets: sales = $100 million,capital intensity ratio = 0.5 times,debt ratio = 30 percent,and fixed asset turnover ratio = 5 times.

Accepted Answer

A) $10m 
B) $15m 
C) $30m 
D) $50m 
A) $10m 
B) $15m 
C) $30m 
D) $50m

Question 19

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

Question 20

Profitability and Asset Management Ratios You are thinking of investing in Wave Runnerz,Inc.You have only the following information on the firm at year-end 2013: net income = $10 million,total debt = $65 million,and debt ratio = 35 percent.What is Wave Runnerz's ROE for 2013?

Accepted Answer

A) 8.28 percent 
B) 15.38 percent 
C) 28.57 percent 
D) 43.96 percent 
A) 8.28 percent 
B) 15.38 percent 
C) 28.57 percent 
D) 43.96 percent

Which of the following refer to ratios that measure the relationship between a firm's liquid (or current)assets and its current liabilities?

Which ratio measures the number of dollars of operating earnings available to meet each dollar of interest obligations on the firm's debt?

Which ratio measures the percentage of total assets financed by debt?

A firm's year-end price on its common stock is $55.The firm has a profit margin of 6 percent,total assets of $75 million,a total asset turnover ratio of 0.9,no preferred stock,and 2.5 million shares of common stock outstanding.Calculate the PE ratio for the firm.

A firm has an ROA of 12 percent and an ROE of 52 percent.What is the firm's equity multiplier?

Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 10 percent and a dividend payout ratio of 50 percent.What is the internal growth rate?

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

Which of the following measures the operating return on the firm's assets,irrespective of financial leverage and taxes?

Which of the following statements is correct?

Liquidity Ratios You have the following information on Olivia's Bridle Shop: total liabilities and equity = $65 million,current liabilities = $10 million,inventory = $15 million,and quick ratio = 3 times.Using this information,what is the balance for fixed assets on Olivia's balance sheet?

Debt Management Ratios Tierre's Ts,Inc.reported a debt to equity ratio of 3 times at the end of 2013.If the firm's total assets at year-end are $15 million,how much of their assets is financed with equity?

Market Value Ratios Fancy Paws' year-end price on its common stock is $20.The firm has a profit margin of 12 percent,total assets of $20 million,a total asset turnover ratio of 0.5,no preferred stock,and there are 2 million shares of common stock outstanding.What is the PE ratio for Fancy Paws?

All of the following are users of financial ratios EXCEPT:

Which ratio assesses how efficiently a firm uses its fixed assets?

A firm reported an ROE of 19 percent.The firm's debt ratio was 45 percent,sales were $12 million,and the capital intensity ratio was 1.1 times.Calculate the net income for the firm.

Asset Management and Debt Management Ratios Use the following information to calculate current assets: sales = $100 million,capital intensity ratio = 0.5 times,debt ratio = 30 percent,and fixed asset turnover ratio = 5 times.

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

Profitability and Asset Management Ratios You are thinking of investing in Wave Runnerz,Inc.You have only the following information on the firm at year-end 2013: net income = $10 million,total debt = $65 million,and debt ratio = 35 percent.What is Wave Runnerz's ROE for 2013?

Introduction to Financial Management

Reviewing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

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 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

Which of the following refer to ratios that measure the relationship between a firm's liquid (or current)assets and its current liabilities?

Which ratio measures the number of dollars of operating earnings available to meet each dollar of interest obligations on the firm's debt?

Which ratio measures the percentage of total assets financed by debt?

A firm's year-end price on its common stock is $55.The firm has a profit margin of 6 percent,total assets of $75 million,a total asset turnover ratio of 0.9,no preferred stock,and 2.5 million shares of common stock outstanding.Calculate the PE ratio for the firm.

A firm has an ROA of 12 percent and an ROE of 52 percent.What is the firm's equity multiplier?

Internal Growth Rate Last year Umbrellas Unlimited Corporation had an ROA of 10 percent and a dividend payout ratio of 50 percent.What is the internal growth rate?

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

Which of the following measures the operating return on the firm's assets,irrespective of financial leverage and taxes?

Which of the following statements is correct?

Liquidity Ratios You have the following information on Olivia's Bridle Shop: total liabilities and equity = $65 million,current liabilities = $10 million,inventory = $15 million,and quick ratio = 3 times.Using this information,what is the balance for fixed assets on Olivia's balance sheet?

Debt Management Ratios Tierre's Ts,Inc.reported a debt to equity ratio of 3 times at the end of 2013.If the firm's total assets at year-end are $15 million,how much of their assets is financed with equity?

Market Value Ratios Fancy Paws' year-end price on its common stock is $20.The firm has a profit margin of 12 percent,total assets of $20 million,a total asset turnover ratio of 0.5,no preferred stock,and there are 2 million shares of common stock outstanding.What is the PE ratio for Fancy Paws?

All of the following are users of financial ratios EXCEPT:

Which ratio assesses how efficiently a firm uses its fixed assets?

A firm reported an ROE of 19 percent.The firm's debt ratio was 45 percent,sales were $12 million,and the capital intensity ratio was 1.1 times.Calculate the net income for the firm.

Asset Management and Debt Management Ratios Use the following information to calculate current assets: sales = $100 million,capital intensity ratio = 0.5 times,debt ratio = 30 percent,and fixed asset turnover ratio = 5 times.

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

Profitability and Asset Management Ratios You are thinking of investing in Wave Runnerz,Inc.You have only the following information on the firm at year-end 2013: net income = $10 million,total debt = $65 million,and debt ratio = 35 percent.What is Wave Runnerz's ROE for 2013?

Introduction to Financial Management

Reviewing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

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 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