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Exam 3: Working With Financial Statements

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Question 21

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A firm has total assets with a current book value of $68,700,a current market value of $74,300,and a current replacement cost of $79,200.What is the value of Tobin's Q?

A) .85
B) .87
C) .90
D) .92
E) .94

F) D) and E)
G) A) and E)

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Question 22

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Billings,Inc.has net income of $161,000,a profit margin of 7.6 percent,and an accounts receivable balance of $127,100.Assume that 66 percent of sales are on credit.What is the days' sales in receivables?

A) 21.90 days
B) 27.56 days
C) 33.18 days
D) 35.04 days
E) 36.19 days

F) B) and E)
G) A) and B)

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Question 23

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In general,what does a high Tobin's Q value indicate and how reliable does that value tend to be?

According to the Statement of Cash Flows,an increase in interest expense will _____ the cash flow from _____ activities.

It is easier to evaluate a firm using financial statements when the firm:

An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Shareholders probably have the most interest in which one of the following sets of ratios?

BL Lumber has earnings per share of $1.21.The firm's earnings have been increasing at an average rate of 3.1 percent annually and are expected to continue doing so.The firm has 21,500 shares of stock outstanding at a price per share of $15.60.What is the firm's PEG ratio?

An increase in which of the following will increase the return on equity,all else constant? I.sales II.net income III.depreciation IV.total equity

On the Statement of Cash Flows,which of the following are considered financing activities? I.increase in long-term debt II.decrease in accounts payable III.interest paid IV.dividends paid

A common-size income statement is an accounting statement that expresses all of a firm's expenses as percentage of:

BL Industries has ending inventory of $300,000,and cost of goods sold for the year just ended was $1,410,000.On average,how long does a unit of inventory sit on the shelf before it is sold?

A firm has total debt of $4,850 and a debt-equity ratio of 0.57.What is the value of the total assets?

Which of the following ratios are measures of a firm's liquidity? I.cash coverage ratio II.interval measure III.debt-equity ratio IV.quick ratio

Oscar's Dog House has a profit margin of 5.6 percent,a return on assets of 12.5 percent,and an equity multiplier of 1.49.What is the return on equity?

The Purple Martin has annual sales of $687,400,total debt of $210,000,total equity of $365,000,and a profit margin of 4.80 percent.What is the return on assets?

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

Wise's Corner Grocer had the following current account values.What effect did the change in net working capital have on the firm's cash flows for 2012? $\begin{array} { l c c } & \underline { 2011 } & \underline { 2012 } \\\text { Cash } & 90 & 112 \\\text { Accounts receivable } & 309 & 321 \\\text { Inventory } & 919 & 850 \\\text { Accounts payable } & \$ 617 & \$ 714\end{array}$

You need to analyze a firm's performance in relation to its peers.You can do this either by comparing the firms' balance sheets and income statements or by comparing the firms' ratios.If you only had time to use one means of comparison which method would you use and why?

Which of the following represent problems encountered when comparing the financial statements of two separate entities? I.Either one,or both,of the firms may be conglomerates and thus have unrelated lines of business. II.The operations of the two firms may vary geographically. III.The firms may use differing accounting methods. IV.The two firms may be seasonal in nature and have different fiscal year ends.