Question 1

Dandelion Fields has a Tobin's Q of .96.The replacement cost of the firm's assets is $225,000 and the market value of the firm's debt is $101,000.The firm has 20,000 shares of stock outstanding and a book value per share of $2.09.What is the market to book ratio?

Accepted Answer

A)   2.75 times
B)   3.18 times
C)   3.54 times
D)   4.01 times
E)   4.20 timesF) A) and B)
G) C) and D)

Question 2

Jasper United had sales of $21,000 in 2011 and $24,000 in 2012.The firm's current accounts remained constant.Given this information,which one of the following statements must be true?

Accepted Answer

A)   The total asset turnover rate increased.
B)   The days' sales in receivables increased.
C)   The net working capital turnover rate increased.
D)   The fixed asset turnover decreased.
E)   The receivables turnover rate decreased.F) C) and D)
G) B) and D)

Question 3

-During the year,Kitchen Supply increased its accounts receivable by $130,decreased its inventory by $75,and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Accepted Answer

A)   $245 use of cash
B)   $165 use of cash
C)   $95 use of cash
D)   $95 source of cash
E)   $165 source of cashF) A) and B)
G) All of the above

Question 4

The price-sales ratio is especially useful when analyzing firms that have which one of the following?

Accepted Answer

A)   volatile market prices
B)   negative earnings
C)   positive PEG ratios
D)   a negative Tobin's Q
E)   increasing salesF) None of the above
G) A) and E)

Question 5

The sources and uses of cash over a stated period of time are reflected on the:

Accepted Answer

A)   income statement.
B)   balance sheet.
C)   tax reconciliation statement.
D)   statement of cash flows.
E)   statement of operating position.F) A) and C)
G) A) and B)

Question 6

The most acceptable method of evaluating the financial statements of a firm is to compare the firm's current:

Accepted Answer

A)   financial ratios to the firm's historical ratios.
B)   financial statements to the financial statements of similar firms operating in other countries.
C)   financial ratios to the average ratios of all firms located within the same geographic area.
D)   financial statements to those of larger firms in unrelated industries.
E)   financial statements to the projections that were created based on Tobin's Q.F) D) and E)
G) B) and C)

Question 7

Which one of the following statements is correct?

Accepted Answer

A)   Book values should always be given precedence over market values.
B)   Financial statements are frequently used as the basis for performance evaluations.
C)   Historical information provides no value to someone who is predicting future performance.
D)   Potential lenders place little value on financial statement information.
E)   Reviewing financial information over time has very limited value.F) B) and E)
G) None of the above

Question 8

It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers.Increasingly,this is becoming a more difficult task.Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

Accepted Answer

Many firms are involved in multiple area...

Question 9

Uptown Men's Wear has accounts payable of $2,214,inventory of $7,950,cash of $1,263,fixed assets of $8,400,accounts receivable of $3,907,and long-term debt of $4,200.What is the value of the net working capital to total assets ratio?

Accepted Answer

A)   0.31
B)   0.42
C)   0.47
D)   0.51
E)   0.56F) D) and E)
G) C) and D)

Question 10

Coulter Supply has a total debt ratio of 0.52.What is the equity multiplier?

Accepted Answer

A)   0.89
B)   1.13
C)   1.47
D)   2.08
E)   2.13F) All of the above
G) C) and D)

Question 11

-Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Accepted Answer

A)   Al's has more net income than Ben's.
B)   Ben's is increasing its earnings at a faster rate than the Al's.
C)   Al's has a higher market value per share than does Ben's.
D)   Ben's has a lower market-to-book ratio than Al's.
E)   Al's has a higher net income than Ben's.F) B) and C)
G) None of the above

Question 12

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

Accepted Answer

A)   accounts payable
B)   cash
C)   inventory
D)   accounts receivable
E)   fixed assetsF) C) and E)
G) A) and B)

Question 13

If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

Accepted Answer

A)   0.0
B)   0.5
C)   1.0
D)   1.5
E)   2.0F) A) and E)
G) All of the above

Question 14

A firm uses 2011 as the base year for its financial statements.The common-size,base-year statement for 2012 has an inventory value of 1.08.This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

Accepted Answer

A)   2011 inventory
B)   2011 total assets
C)   2012 total assets
D)   2011 inventory expressed as a percent of 2011 total assets
E)   2012 inventory expressed as a percent of 2012 total assetsF) A) and B)
G) A) and C)

Question 15

An increase in current liabilities will have which one of the following effects,all else held constant? Assume all ratios have positive values.

Accepted Answer

A)   increase in the cash ratio
B)   increase in the net working capital to total assets ratio
C)   decrease in the quick ratio
D)   decrease in the cash coverage ratio
E)   increase in the current ratioF) B) and C)
G) A) and E)

Question 16

Big Guy Subs has net income of $150,980,a price-earnings ratio of 12.8,and earnings per share of $0.87.How many shares of stock are outstanding?

Accepted Answer

A)   13,558
B)   14,407
C)   165,523
D)   171,000
E)   173,540F) B) and C)
G) A) and B)

Question 17

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

Accepted Answer

A)   asset management
B)   long-term solvency
C)   short-term solvency
D)   profitability
E)   turnoverF) B) and E)
G) A) and E)

Question 18

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

Accepted Answer

A)   I and III only
B)   II and IV only
C)   I,III,and IV only
D)   I,II,and III only
E)   I,II,III,and IVF) C) and D)
G) A) and C)

Question 19

The Du Pont identity can be used to help managers answer which of the following questions related to a firm's operations?
I.How many sales dollars has the firm generated per each dollar of assets?
II.How many dollars of assets has a firm acquired per each dollar in shareholders' equity?
III.How much net profit is a firm generating per dollar of sales?
IV.Does the firm have the ability to meet its debt obligations in a timely manner?

Accepted Answer

A)   I and III only
B)   II and IV only
C)   I,II,and III only
D)   II,III and IV only
E)   I,II,III,and IVF) C) and D)
G) D) and E)

Question 20

A firm has sales of $2,190,net income of $174,net fixed assets of $1,600,and current assets of $720.The firm has $310 in inventory.What is the common-size statement value of inventory?

Accepted Answer

A)   13.36 percent
B)   14.16 percent
C)   19.38 percent
D)   30.42 percent
E)   43.06 percentF) C) and E)
G) A) and B)

Exam 3: Working With Financial Statements

Correct Answer
verified

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

Correct Answer
verified

The sources and uses of cash over a stated period of time are reflected on the:

Correct Answer
verified

It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers.Increasingly,this is becoming a more difficult task.Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

Correct Answer
verified
Many firms are involved in multiple area...
View Answer

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

Correct Answer
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Big Guy Subs has net income of $150,980,a price-earnings ratio of 12.8,and earnings per share of $0.87.How many shares of stock are outstanding?

Correct Answer
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Coulter Supply has a total debt ratio of 0.52.What is the equity multiplier?

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
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-Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Correct Answer
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A firm has sales of $2,190,net income of $174,net fixed assets of $1,600,and current assets of $720.The firm has $310 in inventory.What is the common-size statement value of inventory?

Correct Answer
verified

A firm uses 2011 as the base year for its financial statements.The common-size,base-year statement for 2012 has an inventory value of 1.08.This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

Correct Answer
verified

Jasper United had sales of $21,000 in 2011 and $24,000 in 2012.The firm's current accounts remained constant.Given this information,which one of the following statements must be true?

Correct Answer
verified

Dandelion Fields has a Tobin's Q of .96.The replacement cost of the firm's assets is $225,000 and the market value of the firm's debt is $101,000.The firm has 20,000 shares of stock outstanding and a book value per share of $2.09.What is the market to book ratio?

Correct Answer
verified

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

Correct Answer
verified

The most acceptable method of evaluating the financial statements of a firm is to compare the firm's current:

Correct Answer
verified

Uptown Men's Wear has accounts payable of $2,214,inventory of $7,950,cash of $1,263,fixed assets of $8,400,accounts receivable of $3,907,and long-term debt of $4,200.What is the value of the net working capital to total assets ratio?

Correct Answer
verified

If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

Correct Answer
verified

-During the year,Kitchen Supply increased its accounts receivable by $130,decreased its inventory by $75,and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Correct Answer
verified

An increase in current liabilities will have which one of the following effects,all else held constant? Assume all ratios have positive values.

Correct Answer
verified

The price-sales ratio is especially useful when analyzing firms that have which one of the following?

Correct Answer
verified

Exam 3: Working With Financial Statements

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The sources and uses of cash over a stated period of time are reflected on the:

Correct AnswerverifiedShow Answer

It is commonly recommended that the managers of a firm compare the performance of their firm to that of its peers.Increasingly,this is becoming a more difficult task.Explain some of the reasons why comparisons of this type can frequently be either difficult to perform or produce misleading results.

Correct AnswerverifiedMany firms are involved in multiple area...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Big Guy Subs has net income of $150,980,a price-earnings ratio of 12.8,and earnings per share of $0.87.How many shares of stock are outstanding?

Correct AnswerverifiedShow Answer

Coulter Supply has a total debt ratio of 0.52.What is the equity multiplier?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

-Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Correct AnswerverifiedShow Answer

A firm has sales of $2,190,net income of $174,net fixed assets of $1,600,and current assets of $720.The firm has $310 in inventory.What is the common-size statement value of inventory?

Correct AnswerverifiedShow Answer

A firm uses 2011 as the base year for its financial statements.The common-size,base-year statement for 2012 has an inventory value of 1.08.This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

Correct AnswerverifiedShow Answer

Jasper United had sales of $21,000 in 2011 and $24,000 in 2012.The firm's current accounts remained constant.Given this information,which one of the following statements must be true?

Correct AnswerverifiedShow Answer

Dandelion Fields has a Tobin's Q of .96.The replacement cost of the firm's assets is $225,000 and the market value of the firm's debt is $101,000.The firm has 20,000 shares of stock outstanding and a book value per share of $2.09.What is the market to book ratio?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The most acceptable method of evaluating the financial statements of a firm is to compare the firm's current:

Correct AnswerverifiedShow Answer

Uptown Men's Wear has accounts payable of $2,214,inventory of $7,950,cash of $1,263,fixed assets of $8,400,accounts receivable of $3,907,and long-term debt of $4,200.What is the value of the net working capital to total assets ratio?

Correct AnswerverifiedShow Answer

If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

Correct AnswerverifiedShow Answer

-During the year,Kitchen Supply increased its accounts receivable by $130,decreased its inventory by $75,and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Correct AnswerverifiedShow Answer

An increase in current liabilities will have which one of the following effects,all else held constant? Assume all ratios have positive values.

Correct AnswerverifiedShow Answer

The price-sales ratio is especially useful when analyzing firms that have which one of the following?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified
Many firms are involved in multiple area...
View Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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