Exam 4: Financial Analysis-Sizing up Firm Performance

Millers Metalworks,Inc.has a total asset turnover of 2.5 and a net profit margin of 3.5%.The total debt ratio for the firm is 50%.Calculate Millers's return on equity.

Which of the following financial ratios is the best measure of how effectively a firm's management is serving its stockholders?

Wireless Communications has a total asset turnover of 2.66,total liabilities of $1,004,162,and sales revenues of $7,025,000.What is Wireless's debt ratio?

A firm is conducting an analysis of trends over time and discovers that its inventory turnover has declined.This may be due to:

The question "Did the common stockholders receive an adequate return on their investment?" is answered through the use of:

Discuss the limitations of ratio analysis.

-From the information presented in Table 3,calculate the following financial ratios for the Dooley Sportswear Company.

Assume that a particular firm has a total asset turnover ratio lower than the industry norm.In addition,this firm's current ratio and fixed asset turnover ratio also meet industry standards.Based on this information,we can conclude that this firm must have excessive:

-Based on the information in Table 1,the net profit margin is:

Use the following information to answer the following question(s). ABC,Inc.Income Statement (in thousands) -Since 1994,ABC's liquidity has:

Hokie had net income of $26 million for 1996 and paid total cash dividends of $20 million to their common stockholders. -Calculate the following financial ratios for the Hokie Corporation using the information given in Table 4 and 1996 information.

Which of the following is NOT a component of operating income return on investment?

Water Works,Inc.has a current ratio of 1.33,current liabilities of $540,000,and inventory of $400,000.What is Water Works,Inc.'s quick ratio?

Smith Corporation has current assets of $11,400,inventories of $4,000,and a current ratio of 2.6.What is Smith's acid test ratio?

Paper Clip Office Supply had $24,000,000 in sales last year.Its total asset turnover was 6.0.Interest expense was $100,000 (10% on its $1,000,000 of debt).The company is financed entirely with debt and common equity.What is Paper Clip's debt ratio?

A serious pitfall in the interpretation of financial ratios arises when a company,whose business is seasonal,ends its accounting year on March 31,while most companies in the same industry end their accounting period on December 31.

A firm has a return on equity of 20% and a total asset turnover of 4.Assuming a debt ratio of 50% and sales of $1,000,000,calculate net income.

On a common size balance sheet,total assets are equal to 100%.

Spinnit,Limited has a debt ratio of .57,current liabilities of $14,000,and total assets of $70,000.What is the level of Spinnit,Limited's total liabilities?

-Based on the information in Table 1,and using a 360-day year,the average collection period is: