Question 1

Which of these can be used by interested parties to identify changes in corporate performance?

Accepted Answer

A) Common-size financial statements 
B) Industrialized financial statements 
C) Sanitized financial statements 
D) None of these 
A) Common-size financial statements 
B) Industrialized financial statements 
C) Sanitized financial statements 
D) None of these

Question 2

For publicly traded firms,which of these ratios measure what investors think of the company's future performance and risk?

Accepted Answer

A) Liquidity ratios 
B) Market value ratios 
C) Price value ratios 
D) Profitability ratios 
A) Liquidity ratios 
B) Market value ratios 
C) Price value ratios 
D) Profitability ratios

Question 3

Debt Management Ratios Zoe's Dog Toys,Inc.reported a debt to equity ratio of 0.5 times at the end of 2011.If the firm's total assets at year-end are $50 million,how much of their assets is financed with equity?

Accepted Answer

A) $16.67m 
B) $25m 
C) $33.33m 
D) $50m 
A) $16.67m 
B) $25m 
C) $33.33m 
D) $50m

Question 4

Profitability Ratios In 2013,Colin's Guitars,Inc.announced an ROA of 10.01 percent,ROE of 17.35 percent,and profit margin of 5.89 percent.The firm had total assets of $2 million at year-end 2013.Calculate the 2013 values of net income available to common stockholders,common stockholders' equity,and net sales for Colin's Guitars,Inc.

Accepted Answer

The answer of Profitability Ratios In 2013,Colin's Guitars,Inc.announced an ROA...

Question 5

Which statement is true?

Accepted Answer

A) The less liquid assets a firm holds, the less likely it is that the firm will experience financial distress. 
B) The lower the liquidity ratios, the less liquidity risk a firm has. 
C) Liquid assets generate profits for the firm. 
D) Extremely high levels of liquidity guard against liquidity crises, but at the cost of lower returns on assets. 
A) The less liquid assets a firm holds, the less likely it is that the firm will experience financial distress. 
B) The lower the liquidity ratios, the less liquidity risk a firm has. 
C) Liquid assets generate profits for the firm. 
D) Extremely high levels of liquidity guard against liquidity crises, but at the cost of lower returns on assets.

Question 6

Which of these statements is true?

Accepted Answer

A) A low inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management. 
B) A high inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management. 
C) A low inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management. 
D) A high inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management. 
A) A low inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management. 
B) A high inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management. 
C) A low inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management. 
D) A high inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management.

Question 7

Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches,Inc.You have only the following information on the firm at year-end 2011: net income = $500,000,total debt = $12 million,and debt ratio = 40 percent.What is Tikki's ROE for 2011?

Accepted Answer

A) 1.67 percent 
B) 2.78 percent 
C) 4.17 percent 
D) 10.42 percent 
A) 1.67 percent 
B) 2.78 percent 
C) 4.17 percent 
D) 10.42 percent

Question 8

Liquidity Ratios Burt's TVs has current liabilities of $25 million.Cash makes up 40 percent of the current assets and accounts receivable makes up another 20 percent of current assets.Burt's current ratio = 0.85 times.What is the value of inventory listed on the firm's balance sheet?

Accepted Answer

A) $4.25m 
B) $8.5m 
C) $10m 
D) $40m 
A) $4.25m 
B) $8.5m 
C) $10m 
D) $40m

Question 9

Market Value Ratios Tina's Track Supply's market-to-book ratio is currently 4.5 times and PE ratio is 10.5 times.If Tina's Track Supply's common stock is currently selling at $100 per share,what is the book value per share and earnings per share?

Accepted Answer

A) $450, $1,050, respectively 
B) $1,050, $450, respectively 
C) $22.2222, $9.5238, respectively 
D) $9.5238, $22.2222, respectively 
A) $450, $1,050, respectively 
B) $1,050, $450, respectively 
C) $22.2222, $9.5238, respectively 
D) $9.5238, $22.2222, respectively

Question 10

Which type of ratio measures a firm's ability to pay off short-term obligations without relying on inventory sales?

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 11

A firm has an ACP of 38 days and its annual sales are $5.3 million.What is its account receivable balance?

Accepted Answer

A) $551,781 
B) $619,304 
C) $692,098 
D) $759,021 
A) $551,781 
B) $619,304 
C) $692,098 
D) $759,021

Question 12

Explain what managers,analysts and investors might use to understand how ratios are interrelated.

Accepted Answer

Many of the ratios we review are interre

Question 13

A firm reported sales of $10 million.It had a debt ratio of 40 percent and total debt amounted to $3 million.What was the firm's capital intensity ratio?

Accepted Answer

A) 1.25 times 
B) 2.02 times 
C) 0.40 times 
D) 0.75 times 
A) 1.25 times 
B) 2.02 times 
C) 0.40 times 
D) 0.75 times

Question 14

What is the trade-off between using too much financial leverage and not using enough leverage? Who is likely to complain the most in each case?

Accepted Answer

Leverage "levers up" ROE,so increased fi

Question 15

Profitability and Asset Management Ratios You are thinking of investing in Ski Sports,Inc.You have only the following information on the firm at year-end 2013: net income = $50,000,total debt = $1 million,and debt ratio = 70 percent.What is Ski's ROE for 2013?

Accepted Answer

A) 2.94 percent 
B) 3.49 percent 
C) 7.14 percent 
D) 11.67 percent 
A) 2.94 percent 
B) 3.49 percent 
C) 7.14 percent 
D) 11.67 percent

Question 16

Which of the following measures the number of days accounts receivable are held before the firm collects cash from the sale?

Accepted Answer

A) Accounts receivable turnover 
B) Average collection period 
C) Average payment period 
D) Accounts payable turnover 
A) Accounts receivable turnover 
B) Average collection period 
C) Average payment period 
D) Accounts payable turnover

Question 17

The maximum growth rate that can be achieved by financing asset growth with internal financing or retained earnings is called the:

Accepted Answer

A) internal growth rate. 
B) retention rate. 
C) sustainable growth rate. 
D) operating expansion rate. 
A) internal growth rate. 
B) retention rate. 
C) sustainable growth rate. 
D) operating expansion rate.

Question 18

Debt Management Ratios Will's Wheels,Inc.reported a debt-to-equity ratio of 0.65 times at the end of 2013.If the firm's total debt at year-end was $5 million,how much equity does Will's Wheels have?

Accepted Answer

A) $0.65 million 
B) $3.25 million 
C) $5 million 
D) $7.69 million 
A) $0.65 million 
B) $3.25 million 
C) $5 million 
D) $7.69 million

Question 19

Asset Management Ratios CornProducts Corp.ended the year 2013 with an average collection period of 40 days.The firm's credit sales for 2011 were $9 million.What is the approximate year-end 2013 balance in accounts receivable for Corn Products?

Accepted Answer

A) $225,000 
B) $986,300 
C) $4,444,400 
D) $360,000,000 
A) $225,000 
B) $986,300 
C) $4,444,400 
D) $360,000,000

Question 20

Profitability Ratios DJ's Soda Fountain has asked you to help piece together financial information on the firm for the most current year.Managers give you the following information: sales = $20 million,total debt = $3 million,debt ratio = 75 percent,ROE = 27 percent.Using this information,what is DJ's ROA?

Accepted Answer

A) .0675 percent 
B) 6.75 percent 
C) 25.00 percent 
D) 27.00 percent 
A) .0675 percent 
B) 6.75 percent 
C) 25.00 percent 
D) 27.00 percent

Which of these can be used by interested parties to identify changes in corporate performance?

For publicly traded firms,which of these ratios measure what investors think of the company's future performance and risk?

Debt Management Ratios Zoe's Dog Toys,Inc.reported a debt to equity ratio of 0.5 times at the end of 2011.If the firm's total assets at year-end are $50 million,how much of their assets is financed with equity?

Which statement is true?

Which of these statements is true?

Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches,Inc.You have only the following information on the firm at year-end 2011: net income = $500,000,total debt = $12 million,and debt ratio = 40 percent.What is Tikki's ROE for 2011?

Liquidity Ratios Burt's TVs has current liabilities of $25 million.Cash makes up 40 percent of the current assets and accounts receivable makes up another 20 percent of current assets.Burt's current ratio = 0.85 times.What is the value of inventory listed on the firm's balance sheet?

Market Value Ratios Tina's Track Supply's market-to-book ratio is currently 4.5 times and PE ratio is 10.5 times.If Tina's Track Supply's common stock is currently selling at $100 per share,what is the book value per share and earnings per share?

Which type of ratio measures a firm's ability to pay off short-term obligations without relying on inventory sales?

A firm has an ACP of 38 days and its annual sales are $5.3 million.What is its account receivable balance?

Explain what managers,analysts and investors might use to understand how ratios are interrelated.

A firm reported sales of $10 million.It had a debt ratio of 40 percent and total debt amounted to $3 million.What was the firm's capital intensity ratio?

What is the trade-off between using too much financial leverage and not using enough leverage? Who is likely to complain the most in each case?

Profitability and Asset Management Ratios You are thinking of investing in Ski Sports,Inc.You have only the following information on the firm at year-end 2013: net income = $50,000,total debt = $1 million,and debt ratio = 70 percent.What is Ski's ROE for 2013?

Which of the following measures the number of days accounts receivable are held before the firm collects cash from the sale?

The maximum growth rate that can be achieved by financing asset growth with internal financing or retained earnings is called the:

Debt Management Ratios Will's Wheels,Inc.reported a debt-to-equity ratio of 0.65 times at the end of 2013.If the firm's total debt at year-end was $5 million,how much equity does Will's Wheels have?

Asset Management Ratios CornProducts Corp.ended the year 2013 with an average collection period of 40 days.The firm's credit sales for 2011 were $9 million.What is the approximate year-end 2013 balance in accounts receivable for Corn Products?

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 these can be used by interested parties to identify changes in corporate performance?

For publicly traded firms,which of these ratios measure what investors think of the company's future performance and risk?

Debt Management Ratios Zoe's Dog Toys,Inc.reported a debt to equity ratio of 0.5 times at the end of 2011.If the firm's total assets at year-end are $50 million,how much of their assets is financed with equity?

Which statement is true?

Which of these statements is true?

Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches,Inc.You have only the following information on the firm at year-end 2011: net income = $500,000,total debt = $12 million,and debt ratio = 40 percent.What is Tikki's ROE for 2011?

Liquidity Ratios Burt's TVs has current liabilities of $25 million.Cash makes up 40 percent of the current assets and accounts receivable makes up another 20 percent of current assets.Burt's current ratio = 0.85 times.What is the value of inventory listed on the firm's balance sheet?

Market Value Ratios Tina's Track Supply's market-to-book ratio is currently 4.5 times and PE ratio is 10.5 times.If Tina's Track Supply's common stock is currently selling at $100 per share,what is the book value per share and earnings per share?

Which type of ratio measures a firm's ability to pay off short-term obligations without relying on inventory sales?

A firm has an ACP of 38 days and its annual sales are $5.3 million.What is its account receivable balance?

Explain what managers,analysts and investors might use to understand how ratios are interrelated.

A firm reported sales of $10 million.It had a debt ratio of 40 percent and total debt amounted to $3 million.What was the firm's capital intensity ratio?

What is the trade-off between using too much financial leverage and not using enough leverage? Who is likely to complain the most in each case?

Profitability and Asset Management Ratios You are thinking of investing in Ski Sports,Inc.You have only the following information on the firm at year-end 2013: net income = $50,000,total debt = $1 million,and debt ratio = 70 percent.What is Ski's ROE for 2013?

Which of the following measures the number of days accounts receivable are held before the firm collects cash from the sale?

The maximum growth rate that can be achieved by financing asset growth with internal financing or retained earnings is called the:

Debt Management Ratios Will's Wheels,Inc.reported a debt-to-equity ratio of 0.65 times at the end of 2013.If the firm's total debt at year-end was $5 million,how much equity does Will's Wheels have?

Asset Management Ratios CornProducts Corp.ended the year 2013 with an average collection period of 40 days.The firm's credit sales for 2011 were $9 million.What is the approximate year-end 2013 balance in accounts receivable for Corn Products?

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