Exam 4: Financial Analysis-Sizing up Firm Performance

McKinny Enterprises must raise $580,000 to pay off a bank loan at the end of the year.The firm expects sales of $5,200,000 for the year.Depreciation for the year is $315,000.The company's net profit margin is 5%.Can the company pay off its loan through the retention of earnings?

Which of the following is NOT a driving force of the operating profit margin?

Which of the following will increase return on equity?

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

By using common size income statements,firms can determine how various expenses as a percentage of total sales changed from period to period.

An increase in ________ will increase common equity.

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

S.M. ,Inc.had total sales of $400,000 in 1996 (70 percent of its sales are credit).The company's gross profit margin is 10%,its ending inventory is $80,000,and its accounts receivable is $25,000.What amount of funds can be generated by the company if it increases its inventory turnover ratio to 10.0 and reduces its average collection period to 20 days?

Snype,Inc.has an accounts receivable turnover ratio of 7.3.Stork Company has an accounts receivable turnover ratio of 5.0.Which of the following statements is correct?

Differences in accounting practices limit the use of ratio analysis.

Consolidated Industries has total interest charges of $20,000 per year.Sales of $2 million generated an operating income of $220,000 and an after-tax profit of 6% of sales.The firm has a marginal tax rate of 40%.What is the firm's times-interest-earned ratio?

Corbin,Inc.had net income of $150,000 on sales of $5,000,000 during 1995.In addition,the firm's total assets were $2,500,000,and its capital structure is comprised of 40% debt and 60% equity.What was Corbin's return on equity in 1995?

Ortny Industries has an accounts receivable turnover ratio of 4.3.If Ortny has an accounts receivable balance of $90,000,what is Ortny's average daily credit sales? You may use a 360-day year.

Given an accounts receivable turnover of 8 and annual credit sales of $362,000,the average collection period (360-day year)is:

Marshall Networks,Inc.has a total asset turnover of 2.5 and a net profit margin of 3.5%.The firm has a return on equity of 17.5%.Calculate Marshall's debt ratio.

In the times-interest-earned ratio,lease expense is included in:

Ratios are used to standardize financial information.

If Challenge Corporation has sales of $2 million per year (all credit)and an average collection period of 35 days,what is its average amount of accounts receivable (assume a 360-day year)?

If the total asset turnover decreases,then the return on equity will:

Which of the following is NOT a limitation related to the usage of ratios when reviewing a firm's performance?