Question 1

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words,
What do these ratios tell us?

Accepted Answer

A)   The number of days it takes before the current ratio falls to zero.
B)   The number of days of sales needed to make a proﬁt.
C)   The time it takes to completely replace total current assets.
D)   The rate at which assets are replaced.
E)   How long it takes, on average, to entirely deplete these accounts.F) None of the above
G) C) and E)

Question 2

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

Accepted Answer

A)   7.78
B)   8.52
C)   8.95
D)   9.95
E)   10.12F) B) and E)
G) B) and D)

Question 3

The net change in cash over a period of time is equal to:

Accepted Answer

A)   Cash uses plus operating cash ﬂows.
B)   Additions to current assets minus expenditures on ﬁxed assets.
C)   Net income plus depreciation, minus taxes and dividends.
D)   Ending cash minus changes in long-term debt minus additions to ﬁxed assets.
E)   Cash ﬂow from operating activities plus net cash from investment and ﬁnancing activities.F) D) and E)
G) A) and E)

Question 4

A statement that explains the changes in the cash balance of a ﬁrm over time is called a(n) :

Accepted Answer

A)   Statement of ﬁnancial position.
B)   Statement of comprehensive income.
C)   Statement of current assets.
D)   Statement of analysis.
E)   Statement of cash ﬂows.F) A) and D)
G) All of the above

Question 5

Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%.

Accepted Answer

A)   1.30
B)   1.35
C)   1.40
D)   1.45
E)   1.50F) B) and C)
G) A) and C)

Question 6

Which one of the following is true concerning the market-to-book ratio?

Accepted Answer

A)   Extending the depreciation life of a ﬁrm's assets will increase the market-to-book ratio.
B)   A decrease in the price of the stock on the stock exchange will increase the market-to- book ratio.
C)   An increase in the market value of the common stock will increase the market-to-book ratio.
D)   The market-to-book ratio is of most interest to the creditors of a ﬁrm.
E)   The market-to-book ratio provides the selling price of a ﬁrm's inventory.F) C) and D)
G) A) and E)

Question 7

Puffy's Pastries generates ﬁve cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5 %.

Accepted Answer

A)   return on assets
B)   return on equity
C)   proﬁt margin
D)   Du Pont measure
E)   total asset turnoverF) C) and D)
G) B) and E)

Question 8

The Furniture Barn has a proﬁt margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

Accepted Answer

A)   17.14 %
B)   19.87 %
C)   20.67 %
D)   21.69 %
E)   24.08 %F) None of the above
G) C) and E)

Question 9

Calculate the return on equity given the following information: common shares outstanding = 300,000; earning per share = $4.00; total assets = $5,000,000; total equity = $3,000,000.

Accepted Answer

A)   40%
B)   41%
C)   42%
D)   43%
E)   44%F) D) and E)
G) C) and D)

Question 10

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

Accepted Answer

A)   $2.72
B)   $3.40
C)   $5.28
D)   $6.60
E)   $10.00F) C) and D)
G) A) and D)

Question 11

If the ﬁrm is currently carrying a price/earnings ratio of 2, what is the ﬁrm's approximate market price per share?

Accepted Answer

A)   $8
B)   $11
C)   $56
D)   $78
E)   $129F) C) and D)
G) B) and C)

Question 12

A ﬁrm has a debt-equity ratio of .56. What is the total debt ratio?

Accepted Answer

A)   0.29
B)   0.36
C)   0.44
D)   1.44
E)   1.56F) A) and B)
G) A) and C)

Question 13

Given the following information, calculate sales value. Total asset turnover 0.80; total liabilities $5,000; total equity $5,000.

Accepted Answer

A)   $8,600
B)   $8,000
C)   $10,600
D)   $11,600
E)   $12,600F) A) and E)
G) A) and D)

Question 14

Which of the following is not a liquidity ratio?

Accepted Answer

A)   Interval measure.
B)   Current ratio.
C)   Quick ratio.
D)   Net working capital to total assets.
E)   Current asset ampliﬁer.F) C) and E)
G) B) and E)

Exam 3: Working With Financial Statements

Which one of the following is true concerning the market-to-book ratio?

Correct Answer
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Calculate the return on equity given the following information: common shares outstanding = 300,000; earning per share = $4.00; total assets = $5,000,000; total equity = $3,000,000.

Correct Answer
verified

The Furniture Barn has a proﬁt margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

Correct Answer
verified

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words, What do these ratios tell us?

Correct Answer
verified

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

Correct Answer
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Which of the following is not a liquidity ratio?

Correct Answer
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Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%.

Correct Answer
verified

A statement that explains the changes in the cash balance of a ﬁrm over time is called a(n) :

Correct Answer
verified

Puffy's Pastries generates ﬁve cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5 %.

Correct Answer
verified

Given the following information, calculate sales value. Total asset turnover 0.80; total liabilities $5,000; total equity $5,000.

Correct Answer
verified

The net change in cash over a period of time is equal to:

Correct Answer
verified

A ﬁrm has a debt-equity ratio of .56. What is the total debt ratio?

Correct Answer
verified

If the ﬁrm is currently carrying a price/earnings ratio of 2, what is the ﬁrm's approximate market price per share?

Correct Answer
verified

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

Correct Answer
verified

Exam 3: Working With Financial Statements

Which one of the following is true concerning the market-to-book ratio?

Correct AnswerverifiedShow Answer

Calculate the return on equity given the following information: common shares outstanding = 300,000; earning per share = $4.00; total assets = $5,000,000; total equity = $3,000,000.

Correct AnswerverifiedShow Answer

The Furniture Barn has a proﬁt margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

Correct AnswerverifiedShow Answer

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words, What do these ratios tell us?

Correct AnswerverifiedShow Answer

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

Correct AnswerverifiedShow Answer

Which of the following is not a liquidity ratio?

Correct AnswerverifiedShow Answer

Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%.

Correct AnswerverifiedShow Answer

A statement that explains the changes in the cash balance of a ﬁrm over time is called a(n) :

Correct AnswerverifiedShow Answer

Puffy's Pastries generates ﬁve cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5 %.

Correct AnswerverifiedShow Answer

Given the following information, calculate sales value. Total asset turnover 0.80; total liabilities $5,000; total equity $5,000.

Correct AnswerverifiedShow Answer

The net change in cash over a period of time is equal to:

Correct AnswerverifiedShow Answer

A ﬁrm has a debt-equity ratio of .56. What is the total debt ratio?

Correct AnswerverifiedShow Answer

If the ﬁrm is currently carrying a price/earnings ratio of 2, what is the ﬁrm's approximate market price per share?

Correct AnswerverifiedShow Answer

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

Correct AnswerverifiedShow Answer

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