Question 1

Which of the following industries has the highest average inventory turnover ratio?

Accepted Answer

A) Retail clothing stores 
B) Jewelry stores 
C) Automobile dealerships 
D) Supermarkets 
A) Retail clothing stores 
B) Jewelry stores 
C) Automobile dealerships 
D) Supermarkets D

Question 2

A firm that wants to know if it has enough cash to meet its bills would be most likely to use which kind of ratio?

Accepted Answer

A) Liquidity 
B) Leverage 
C) Efficiency 
D) Profitability 
A) Liquidity 
B) Leverage 
C) Efficiency 
D) Profitability A

Question 3

Storm King Associates has a total asset turnover ratio of 1.90 and a return on total assets of 7.20%.What is Storm King's net profit margin?

Accepted Answer

A) 3.79 
B) 13.68 
C) 9.10 
D) None of the above 
A) 3.79 
B) 13.68 
C) 9.10 
D) None of the above A

Question 4

Financial ratios that are higher than industry averages may indicate problems which are as detrimental to the firm as ratios that are too low.

Accepted Answer

A) True 
 B)False

Question 5

The debt ratio is a measure of a firm's:

Accepted Answer

A) leverage. 
B) profitability. 
C) liquidity. 
D) efficiency. 
A) leverage. 
B) profitability. 
C) liquidity. 
D) efficiency.

Question 6

Champion Company has sales of $20 million,total debt of $1.5 million,and a debt ratio of 40%.What is Champion's total asset turnover?

Accepted Answer

A) 13.33 
B) 9.11 
C) 6.55 
D) 5.33 
A) 13.33 
B) 9.11 
C) 6.55 
D) 5.33

Question 7

-Based on the information in Table 1,the inventory turnover ratio is:

Accepted Answer

A) 0.29 times. 
B) 2.35 times. 
C) 0.43 times. 
D) 3.47 times. 
A) 0.29 times. 
B) 2.35 times. 
C) 0.43 times. 
D) 3.47 times.

Question 8

Kiosk Corp.has current assets of $4.5 million and current liabilities of $3.6 million.The current ratio is 1.25,and the quick ratio is 0.75.How much does Kiosk have invested in inventory (in millions)?

Accepted Answer

A) $0.8 
B) $1.8 
C) $2.4 
D) $2.9 
E) $3.6 
A) $0.8 
B) $1.8 
C) $2.4 
D) $2.9 
E) $3.6

Question 9

The accounting rate of return on stockholders' investments is measured by:

Accepted Answer

A) return on assets. 
B) return on equity. 
C) operating income return on investment. 
D) realized rate of inflation. 
A) return on assets. 
B) return on equity. 
C) operating income return on investment. 
D) realized rate of inflation.

Question 10

Which of the following will help an analyst determine how well a firm is able to meet its debt obligations?

Accepted Answer

A) Total liability turnover 
B) Times-interest-earned 
C) Return on debt 
D) Asset ratio 
A) Total liability turnover 
B) Times-interest-earned 
C) Return on debt 
D) Asset ratio

Question 11

Firms that engage in multiple lines of business make it difficult to assign them to an industry category for ratio analysis.

Accepted Answer

A) True 
 B)False

Question 12

An example of a liquidity ratio is the:

Accepted Answer

A) quick ratio. 
B) debt ratio. 
C) times-interest-earned. 
D) return on assets. 
A) quick ratio. 
B) debt ratio. 
C) times-interest-earned. 
D) return on assets.

Question 13

Dew Point Dynamite,Inc.generated a 1.23 total asset turnover in its latest fiscal year on assets of $2,112,077.The firm has total liabilities of $950,997.The firm's net profit margin was 10.3%.What is Dew Point's return on equity? Round to the nearest 0.1%.

Accepted Answer

A) 23.1% 
B) 12.6% 
C) 5.5% 
D) 18.2% 
A) 23.1% 
B) 12.6% 
C) 5.5% 
D) 18.2%

Question 14

Use the following information to answer the following question(s).
   ABC,Inc.Income Statement (in thousands)

-In 1995,ABC's average collection period is:

Accepted Answer

A) 30 days. 
B) 32.5 days. 
C) 25 days. 
D) 35 days. 
A) 30 days. 
B) 32.5 days. 
C) 25 days. 
D) 35 days.

Question 15

Kannan Carpets,Inc.has asked you to calculate the company's quick ratio for 2001.All you have is a partial balance sheet and some assumptions.Using the information provided,calculate Kannan's quick ratio for 2001.
Gross profit margin = 50%
Inventory turnover (COGS/Inv)= 5
2001 sales = $3,000

Accepted Answer

A) 0.2 
B) 0.4 
C) 0.6 
D) 0.8 
A) 0.2 
B) 0.4 
C) 0.6 
D) 0.8

Question 16

Smart and Smiley Incorporated has an average collection period of 74 days.What is the accounts receivable turnover ratio for Smart and Smiley? You may use a 360-day year.

Accepted Answer

A) 4.86 
B) 2.47 
C) 2.66 
D) 1.68 
A) 4.86 
B) 2.47 
C) 2.66 
D) 1.68

Question 17

Snort and Smiley Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000,and total assets of $70,000.What is Snort and Smiley's level of current liabilities?

Accepted Answer

A) $8,400 
B) $9,400 
C) $12,340 
D) $10,600 
A) $8,400 
B) $9,400 
C) $12,340 
D) $10,600

Question 18

Which of the following statements is true?

Accepted Answer

A) Current assets consist of cash,accounts receivable,inventory,and net plant,property,and equipment. 
B) The quick ratio is a more restrictive measure of a firm's liquidity than the current ratio. 
C) For the average firm,inventory is considered to be more "liquid" than accounts receivable. 
D) A successful firm's current liabilities should always be greater than its current assets. 
A) Current assets consist of cash,accounts receivable,inventory,and net plant,property,and equipment. 
B) The quick ratio is a more restrictive measure of a firm's liquidity than the current ratio. 
C) For the average firm,inventory is considered to be more "liquid" than accounts receivable. 
D) A successful firm's current liabilities should always be greater than its current assets.

Question 19

The focus of DuPont Analysis is to provide management information as to how the firm is using its resources to maximize returns on owners' investments.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following ratios indicates how rapidly the firm's credit accounts are being collected?

Accepted Answer

A) Debt ratio 
B) Gross profit margin 
C) Accounts receivable turnover ratio 
D) Fixed asset turnover 
A) Debt ratio 
B) Gross profit margin 
C) Accounts receivable turnover ratio 
D) Fixed asset turnover

Which of the following industries has the highest average inventory turnover ratio?

A firm that wants to know if it has enough cash to meet its bills would be most likely to use which kind of ratio?

Storm King Associates has a total asset turnover ratio of 1.90 and a return on total assets of 7.20%.What is Storm King's net profit margin?

Financial ratios that are higher than industry averages may indicate problems which are as detrimental to the firm as ratios that are too low.

The debt ratio is a measure of a firm's:

Champion Company has sales of $20 million,total debt of $1.5 million,and a debt ratio of 40%.What is Champion's total asset turnover?

-Based on the information in Table 1,the inventory turnover ratio is:

Kiosk Corp.has current assets of $4.5 million and current liabilities of $3.6 million.The current ratio is 1.25,and the quick ratio is 0.75.How much does Kiosk have invested in inventory (in millions)?

The accounting rate of return on stockholders' investments is measured by:

Which of the following will help an analyst determine how well a firm is able to meet its debt obligations?

Firms that engage in multiple lines of business make it difficult to assign them to an industry category for ratio analysis.

An example of a liquidity ratio is the:

Dew Point Dynamite,Inc.generated a 1.23 total asset turnover in its latest fiscal year on assets of $2,112,077.The firm has total liabilities of $950,997.The firm's net profit margin was 10.3%.What is Dew Point's return on equity? Round to the nearest 0.1%.

Use the following information to answer the following question(s). ABC,Inc.Income Statement (in thousands) -In 1995,ABC's average collection period is:

Kannan Carpets,Inc.has asked you to calculate the company's quick ratio for 2001.All you have is a partial balance sheet and some assumptions.Using the information provided,calculate Kannan's quick ratio for 2001. Gross profit margin = 50% Inventory turnover (COGS/Inv)= 5 2001 sales = $3,000

Smart and Smiley Incorporated has an average collection period of 74 days.What is the accounts receivable turnover ratio for Smart and Smiley? You may use a 360-day year.

Snort and Smiley Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000,and total assets of $70,000.What is Snort and Smiley's level of current liabilities?

Which of the following statements is true?

The focus of DuPont Analysis is to provide management information as to how the firm is using its resources to maximize returns on owners' investments.

Which of the following ratios indicates how rapidly the firm's credit accounts are being collected?

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements, taxes, and Cash Flows

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 4: Financial Analysis-Sizing up Firm Performance

Which of the following industries has the highest average inventory turnover ratio?

A firm that wants to know if it has enough cash to meet its bills would be most likely to use which kind of ratio?

Storm King Associates has a total asset turnover ratio of 1.90 and a return on total assets of 7.20%.What is Storm King's net profit margin?

Financial ratios that are higher than industry averages may indicate problems which are as detrimental to the firm as ratios that are too low.

The debt ratio is a measure of a firm's:

Champion Company has sales of $20 million,total debt of $1.5 million,and a debt ratio of 40%.What is Champion's total asset turnover?

-Based on the information in Table 1,the inventory turnover ratio is:

Kiosk Corp.has current assets of $4.5 million and current liabilities of $3.6 million.The current ratio is 1.25,and the quick ratio is 0.75.How much does Kiosk have invested in inventory (in millions)?

The accounting rate of return on stockholders' investments is measured by:

Which of the following will help an analyst determine how well a firm is able to meet its debt obligations?

Firms that engage in multiple lines of business make it difficult to assign them to an industry category for ratio analysis.

An example of a liquidity ratio is the:

Dew Point Dynamite,Inc.generated a 1.23 total asset turnover in its latest fiscal year on assets of $2,112,077.The firm has total liabilities of $950,997.The firm's net profit margin was 10.3%.What is Dew Point's return on equity? Round to the nearest 0.1%.

Use the following information to answer the following question(s). ABC,Inc.Income Statement (in thousands) -In 1995,ABC's average collection period is:

Kannan Carpets,Inc.has asked you to calculate the company's quick ratio for 2001.All you have is a partial balance sheet and some assumptions.Using the information provided,calculate Kannan's quick ratio for 2001. Gross profit margin = 50% Inventory turnover (COGS/Inv)= 5 2001 sales = $3,000

Smart and Smiley Incorporated has an average collection period of 74 days.What is the accounts receivable turnover ratio for Smart and Smiley? You may use a 360-day year.

Snort and Smiley Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000,and total assets of $70,000.What is Snort and Smiley's level of current liabilities?

Which of the following statements is true?

The focus of DuPont Analysis is to provide management information as to how the firm is using its resources to maximize returns on owners' investments.

Which of the following ratios indicates how rapidly the firm's credit accounts are being collected?

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements, taxes, and Cash Flows

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters