Question 1

Last year Umbrellas Unlimited Corporation had an ROE of 16.5 percent and a dividend payout ratio of 40 percent.What is the sustainable growth rate?

Accepted Answer

A)  13.17 percent 
B)  10.99 percent 
C)  27.50 percent 
D)  32.93 percent 
A)  13.17 percent 
B)  10.99 percent 
C)  27.50 percent 
D)  32.93 percent

Question 2

Which ratio measures the number of dollars of sales produced per dollar of inventory?

Accepted Answer

A)  asset management 
B)  cash 
C)  internal-growth 
D)  inventory turnover 
A)  asset management 
B)  cash 
C)  internal-growth 
D)  inventory turnover

Question 3

Rachets R Us Corp.reported sales for 2013 of $200,000.Rachets R Us listed $25,000 of inventory on its balance sheet.Using a 365-day year,how many days did Rachets R Us's inventory stay on the premises? How many times per year did Rachets R Us's inventory turnover?

Accepted Answer

A)  0.125 days, 8 times, respectively 
B)  0.125 days, 5 times, respectively 
C)  45.625 days, 8 times, respectively 
D)  45.625 days, 5 times respectively 
A)  0.125 days, 8 times, respectively 
B)  0.125 days, 5 times, respectively 
C)  45.625 days, 8 times, respectively 
D)  45.625 days, 5 times respectively

Question 4

Bree's Tennis Supply's market-to-book ratio is currently 9.4 times and PE ratio is 20 times.If Bree's Tennis Supply's common stock is currently selling at $20.50 per share,what is the book value per share and earnings per share?

Accepted Answer

A)  $1.025, $2.1809, respectively 
B)  $2.1809, $1.025, respectively 
C)  $410.00, $192.70, respectively 
D)  $192.70, $410.00, respectively 
A)  $1.025, $2.1809, respectively 
B)  $2.1809, $1.025, respectively 
C)  $410.00, $192.70, respectively 
D)  $192.70, $410.00, respectively

Question 5

Which of the following statements is not correct regarding accounts payable management and average payment period (APP)?

Accepted Answer

A)  A firm wants to pay for its purchases as slowly as possible. 
B)  The faster the firm pays for its supply purchases, the longer it can avoid financing such as notes payable or long-term debt. 
C)  A high APP is generally a sign of good management. 
D)  An extremely high APP could be a sign of bad firm management. 
A)  A firm wants to pay for its purchases as slowly as possible. 
B)  The faster the firm pays for its supply purchases, the longer it can avoid financing such as notes payable or long-term debt. 
C)  A high APP is generally a sign of good management. 
D)  An extremely high APP could be a sign of bad firm management.

Question 6

Common-size financial statements

Accepted Answer

A)  allow for an easy comparison of balance sheets and income statements across firms in the industry. 
B)  provide quantitative clues about the direction that the firm is moving. 
C)  are obtained by dividing all income statement accounts by net sales and all balance sheet accounts by total assets. 
D)  All of these choices are correct 
A)  allow for an easy comparison of balance sheets and income statements across firms in the industry. 
B)  provide quantitative clues about the direction that the firm is moving. 
C)  are obtained by dividing all income statement accounts by net sales and all balance sheet accounts by total assets. 
D)  All of these choices are correct

Question 7

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 8

The term "capital structure" refers to

Accepted Answer

A)  the amount of current versus long-term debt on the balance sheet. 
B)  the amount of current versus fixed assets on the balance sheet. 
C)  the amount of long-term debt versus equity on the balance sheet. 
A)  the amount of current versus long-term debt on the balance sheet. 
B)  the amount of current versus fixed assets on the balance sheet. 
C)  the amount of long-term debt versus equity on the balance sheet.

Question 9

To interpret financial ratios,managers,analysts,and investors use which of the following type of benchmarks?

Accepted Answer

A)  competitive analysis 
B)  cross-industry analysis 
C)  time-industry analysis 
D)  time series analysis 
A)  competitive analysis 
B)  cross-industry analysis 
C)  time-industry analysis 
D)  time series analysis

Question 10

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 11

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

Question 12

Which of these is NOT considered a coverage ratio?

Accepted Answer

A)  cash coverage ratio 
B)  current ratio 
C)  fixed-charge coverage ratio 
D)  times interest earned 
A)  cash coverage ratio 
B)  current ratio 
C)  fixed-charge coverage ratio 
D)  times interest earned

Question 13

Firm A and Firm B have the same total assets,ROA and profit margin (greater than 0).However,Firm B has a higher debt ratio and interest expense than Firm A.Which of the following statements is correct?

Accepted Answer

A)  Firm B must have a higher ROE than Firm A. 
B)  Firm B must have a higher capital intensity ratio than Firm A. 
C)  Firm B must have a higher fixed asset turnover than Firm A. 
D)  Firm B must have a lower ACP than Firm A. 
A)  Firm B must have a higher ROE than Firm A. 
B)  Firm B must have a higher capital intensity ratio than Firm A. 
C)  Firm B must have a higher fixed asset turnover than Firm A. 
D)  Firm B must have a lower ACP than Firm A.

Question 14

Which of the following activities will increase a firm's current ratio?

Accepted Answer

A)  sale of inventory for a profit 
B)  buy equipment with a long-term bank loan 
C)  pay the current month's rent 
A)  sale of inventory for a profit 
B)  buy equipment with a long-term bank loan 
C)  pay the current month's rent

Question 15

Last year Café Creations,Inc.had an ROA of 25 percent,a profit margin of 12 percent,and sales of $4 million.What is Café Creations' total assets?

Accepted Answer

A)  $0.12m. 
B)  $0.48m. 
C)  $1.00m. 
D)  $1.92m. 
A)  $0.12m. 
B)  $0.48m. 
C)  $1.00m. 
D)  $1.92m.

Question 16

Last year,DJ's Soda Fountains,Inc.reported an ROE = 27 percent.The firm's debt ratio was 50 percent,sales were $9 million,and the capital intensity ratio was 1.5 times.What is the net income for DJ's last year?

Accepted Answer

A)  $1.22m 
B)  $1.82m 
C)  $2.43m 
D)  $2.84m 
A)  $1.22m 
B)  $1.82m 
C)  $2.43m 
D)  $2.84m

Question 17

A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent.If the total asset turnover is 3.4,what is the firm's profit margin?

Accepted Answer

A)  2.94 percent 
B)  3.86 percent 
C)  4.29 percent 
D)  5.67 percent 
A)  2.94 percent 
B)  3.86 percent 
C)  4.29 percent 
D)  5.67 percent

Question 18

Which of the following measures the number of dollars of sales produced per dollar of fixed assets?

Accepted Answer

A)  fixed asset to working capital ratio 
B)  fixed asset turnover ratio 
C)  fixed asset management ratio 
D)  sales to working capital ratio 
A)  fixed asset to working capital ratio 
B)  fixed asset turnover ratio 
C)  fixed asset management ratio 
D)  sales to working capital ratio

Question 19

Which of these ratios show the combined effects of liquidity,asset management,and debt management on the overall operation results of the firm?

Accepted Answer

A)  liquidity 
B)  coverage 
C)  financial 
D)  profitability 
A)  liquidity 
B)  coverage 
C)  financial 
D)  profitability

Question 20

Fancy Paws' year-end price on its common stock is $20.The firm has total assets of $40 million,the debt ratio is 40 percent,there is no preferred stock,and there are 2 million shares of common stock outstanding.Calculate the market-to-book ratio for Fancy Paws.

Accepted Answer

A)  0.47 
B)  1.67 
C)  8.00 
D)  10.00 
A)  0.47 
B)  1.67 
C)  8.00 
D)  10.00

Last year Umbrellas Unlimited Corporation had an ROE of 16.5 percent and a dividend payout ratio of 40 percent.What is the sustainable growth rate?

Which ratio measures the number of dollars of sales produced per dollar of inventory?

Rachets R Us Corp.reported sales for 2013 of $200,000.Rachets R Us listed $25,000 of inventory on its balance sheet.Using a 365-day year,how many days did Rachets R Us's inventory stay on the premises? How many times per year did Rachets R Us's inventory turnover?

Bree's Tennis Supply's market-to-book ratio is currently 9.4 times and PE ratio is 20 times.If Bree's Tennis Supply's common stock is currently selling at $20.50 per share,what is the book value per share and earnings per share?

Which of the following statements is not correct regarding accounts payable management and average payment period (APP)?

Common-size financial statements

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

The term "capital structure" refers to

To interpret financial ratios,managers,analysts,and investors use which of the following type of benchmarks?

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?

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

Which of these is NOT considered a coverage ratio?

Firm A and Firm B have the same total assets,ROA and profit margin (greater than 0).However,Firm B has a higher debt ratio and interest expense than Firm A.Which of the following statements is correct?

Which of the following activities will increase a firm's current ratio?

Last year Café Creations,Inc.had an ROA of 25 percent,a profit margin of 12 percent,and sales of $4 million.What is Café Creations' total assets?

Last year,DJ's Soda Fountains,Inc.reported an ROE = 27 percent.The firm's debt ratio was 50 percent,sales were $9 million,and the capital intensity ratio was 1.5 times.What is the net income for DJ's last year?

A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent.If the total asset turnover is 3.4,what is the firm's profit margin?

Which of the following measures the number of dollars of sales produced per dollar of fixed assets?

Which of these ratios show the combined effects of liquidity,asset management,and debt management on the overall operation results of the firm?

Fancy Paws' year-end price on its common stock is $20.The firm has total assets of $40 million,the debt ratio is 40 percent,there is no preferred stock,and there are 2 million shares of common stock outstanding.Calculate the market-to-book ratio for Fancy Paws.

Introduction to Financial Management

Reviewing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

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 Management and Policies

Filters

Exam 3: Analyzing Financial Statements

Last year Umbrellas Unlimited Corporation had an ROE of 16.5 percent and a dividend payout ratio of 40 percent.What is the sustainable growth rate?

Which ratio measures the number of dollars of sales produced per dollar of inventory?

Rachets R Us Corp.reported sales for 2013 of $200,000.Rachets R Us listed $25,000 of inventory on its balance sheet.Using a 365-day year,how many days did Rachets R Us's inventory stay on the premises? How many times per year did Rachets R Us's inventory turnover?

Bree's Tennis Supply's market-to-book ratio is currently 9.4 times and PE ratio is 20 times.If Bree's Tennis Supply's common stock is currently selling at $20.50 per share,what is the book value per share and earnings per share?

Which of the following statements is not correct regarding accounts payable management and average payment period (APP)?

Common-size financial statements

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

The term "capital structure" refers to

To interpret financial ratios,managers,analysts,and investors use which of the following type of benchmarks?

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?

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

Which of these is NOT considered a coverage ratio?

Firm A and Firm B have the same total assets,ROA and profit margin (greater than 0).However,Firm B has a higher debt ratio and interest expense than Firm A.Which of the following statements is correct?

Which of the following activities will increase a firm's current ratio?

Last year Café Creations,Inc.had an ROA of 25 percent,a profit margin of 12 percent,and sales of $4 million.What is Café Creations' total assets?

Last year,DJ's Soda Fountains,Inc.reported an ROE = 27 percent.The firm's debt ratio was 50 percent,sales were $9 million,and the capital intensity ratio was 1.5 times.What is the net income for DJ's last year?

A firm has a ROE of 14 percent and a debt-to-equity ratio of 40 percent.If the total asset turnover is 3.4,what is the firm's profit margin?

Which of the following measures the number of dollars of sales produced per dollar of fixed assets?

Which of these ratios show the combined effects of liquidity,asset management,and debt management on the overall operation results of the firm?

Fancy Paws' year-end price on its common stock is $20.The firm has total assets of $40 million,the debt ratio is 40 percent,there is no preferred stock,and there are 2 million shares of common stock outstanding.Calculate the market-to-book ratio for Fancy Paws.

Introduction to Financial Management

Reviewing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

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 Management and Policies

Filters