Question 1

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

Accepted Answer

A) 90 days. 
B) 45 days. 
C) 75 days. 
D) 60 days. 
A) 90 days. 
B) 45 days. 
C) 75 days. 
D) 60 days.

Question 2

Heavy Load,Inc.has sales of $3,450,000,total assets of $1,240,000,and total liabilities of $275,000,which consist strictly of notes payable.The firm's operating profit margin is 16.1%,and it pays a 10% rate of interest on its notes payable.How much is the firm's times-interest-earned?

Accepted Answer

A) 15.6 
B) 45.3 
C) 20.2 
D) 3.0 
A) 15.6 
B) 45.3 
C) 20.2 
D) 3.0

Question 3

Other things held constant,an increase in ________ will decrease the current ratio.Assume an initial current ratio greater than 1.0.

Accepted Answer

A) accruals 
B) common stock 
C) average collection period 
D) cash 
A) accruals 
B) common stock 
C) average collection period 
D) cash

Question 4

Which of the following is the best indicator of management's effectiveness at generating profits relative to the firm's assets?

Accepted Answer

A) Quick ratio 
B) Fixed assets turnover 
C) Return on assets 
D) Accounts receivable turnover 
A) Quick ratio 
B) Fixed assets turnover 
C) Return on assets 
D) Accounts receivable turnover

Question 5

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?

Accepted Answer

A) Snype's average collection period is less than Stork's. 
B) Stork's average collection period is less than Snype's. 
C) Snype has a lower accounts receivable account on average than does Stork Company. 
D) Stork Company has (on average)a lower accounts receivable account than does Snype. 
A) Snype's average collection period is less than Stork's. 
B) Stork's average collection period is less than Snype's. 
C) Snype has a lower accounts receivable account on average than does Stork Company. 
D) Stork Company has (on average)a lower accounts receivable account than does Snype.

Question 6

When the present financial ratios of a firm are compared with similar ratios for another firm in the same industry,it is called trend analysis.

Accepted Answer

A) True 
 B)False

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

The current ratio and the acid test ratio are both measures of financial leverage.

Accepted Answer

A) True 
 B)False

Question 9

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.

Accepted Answer

A) 30% 
B) 40% 
C) 50% 
D) 60% 
A) 30% 
B) 40% 
C) 50% 
D) 60%

Question 10

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?

Accepted Answer

A) 1.11 
B) 0.86 
C) 1.90 
D) 0.59 
A) 1.11 
B) 0.86 
C) 1.90 
D) 0.59

Question 11

A retailer that accepts credit cards will have a higher accounts receivable turnover ratio than a retailer with its own credit department.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Which of the following will increase return on equity?

Accepted Answer

A) An increase in sales with a proportionate increase in costs and expenses 
B) An increase in sales relative to the asset base 
C) A decrease in leverage 
D) Both A and C 
A) An increase in sales with a proportionate increase in costs and expenses 
B) An increase in sales relative to the asset base 
C) A decrease in leverage 
D) Both A and C

Question 14

What is the purpose of using common size balance sheets and common size income statements?

Accepted Answer

The purpose is to allow a company to com

Question 15

Based on the information in Table 1,the average collection period is

Accepted Answer

A) 71 days. 
B) 84 days. 
C) 64 days. 
D) 127 days. 
A) 71 days. 
B) 84 days. 
C) 64 days. 
D) 127 days.

Question 16

Lorna Dome,Inc.has an annual interest expense of $30,000.Lorna Dome's times-interest-earned ratio is 4.2.What is Lorna Dome's operating income?

Accepted Answer

A) $96,000 
B) $57,000 
C) $126,000 
D) $57,600 
A) $96,000 
B) $57,000 
C) $126,000 
D) $57,600

Question 17

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?

Accepted Answer

A) 38.0% 
B) 14.3% 
C) 26.7% 
D) 81.1% 
A) 38.0% 
B) 14.3% 
C) 26.7% 
D) 81.1%

Question 18

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

Accepted Answer

A) liquidity ratios. 
B) profitability ratios. 
C) coverage ratios. 
D) leverage ratios. 
A) liquidity ratios. 
B) profitability ratios. 
C) coverage ratios. 
D) leverage ratios.

Question 19

An increase in ________ will increase common equity.

Accepted Answer

A) paid in capital 
B) retained earnings 
C) dividends paid 
D) both A and C 
A) paid in capital 
B) retained earnings 
C) dividends paid 
D) both A and C

Question 20

Which of the following ratios would be the most useful in evaluating the ability of a firm to meet its short-term obligations?

Accepted Answer

A) The quick ratio (acid test) 
B) Return on equity 
C) Total asset turnover 
D) Operating profit margin 
A) The quick ratio (acid test) 
B) Return on equity 
C) Total asset turnover 
D) Operating profit margin

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

Heavy Load,Inc.has sales of $3,450,000,total assets of $1,240,000,and total liabilities of $275,000,which consist strictly of notes payable.The firm's operating profit margin is 16.1%,and it pays a 10% rate of interest on its notes payable.How much is the firm's times-interest-earned?

Other things held constant,an increase in ________ will decrease the current ratio.Assume an initial current ratio greater than 1.0.

Which of the following is the best indicator of management's effectiveness at generating profits relative to the firm's assets?

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?

When the present financial ratios of a firm are compared with similar ratios for another firm in the same industry,it is called trend analysis.

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

The current ratio and the acid test ratio are both measures of financial leverage.

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.

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?

A retailer that accepts credit cards will have a higher accounts receivable turnover ratio than a retailer with its own credit department.

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)?

Which of the following will increase return on equity?

What is the purpose of using common size balance sheets and common size income statements?

Based on the information in Table 1,the average collection period is

Lorna Dome,Inc.has an annual interest expense of $30,000.Lorna Dome's times-interest-earned ratio is 4.2.What is Lorna Dome's operating income?

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?

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

An increase in ________ will increase common equity.

Which of the following ratios would be the most useful in evaluating the ability of a firm to meet its short-term obligations?

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

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

Heavy Load,Inc.has sales of $3,450,000,total assets of $1,240,000,and total liabilities of $275,000,which consist strictly of notes payable.The firm's operating profit margin is 16.1%,and it pays a 10% rate of interest on its notes payable.How much is the firm's times-interest-earned?

Other things held constant,an increase in ________ will decrease the current ratio.Assume an initial current ratio greater than 1.0.

Which of the following is the best indicator of management's effectiveness at generating profits relative to the firm's assets?

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?

When the present financial ratios of a firm are compared with similar ratios for another firm in the same industry,it is called trend analysis.

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

The current ratio and the acid test ratio are both measures of financial leverage.

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.

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?

A retailer that accepts credit cards will have a higher accounts receivable turnover ratio than a retailer with its own credit department.

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)?

Which of the following will increase return on equity?

What is the purpose of using common size balance sheets and common size income statements?

Based on the information in Table 1,the average collection period is

Lorna Dome,Inc.has an annual interest expense of $30,000.Lorna Dome's times-interest-earned ratio is 4.2.What is Lorna Dome's operating income?

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?

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

An increase in ________ will increase common equity.

Which of the following ratios would be the most useful in evaluating the ability of a firm to meet its short-term obligations?

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