Question 1

Which financial ratio indicates the ability of the company to meet its annual interest costs?

Accepted Answer

A)  debt to asset ratio 
B)  debt to equity ratio 
C)  times interest earned 
D)  long-term debt to capital structure 
E)  coverage of fixed charges 
A)  debt to asset ratio 
B)  debt to equity ratio 
C)  times interest earned 
D)  long-term debt to capital structure 
E)  coverage of fixed charges

Question 2

All of the following ratios represent activity ratios EXCEPT

Accepted Answer

A)  accounts payable period. 
B)  days of inventory. 
C)  net working capital turnover. 
D)  earnings per share. 
E)  days of cash. 
A)  accounts payable period. 
B)  days of inventory. 
C)  net working capital turnover. 
D)  earnings per share. 
E)  days of cash.

Question 3

A typical financial analysis would compare the firm under study with industry standards.

Accepted Answer

A) True 
 B)False

Question 4

In case analysis, it is best to make an exhibit that includes all the financial ratios.

Accepted Answer

A) True 
 B)False

Question 5

What is the Z-value?

Accepted Answer

If the corporation being studied appears

Question 6

Which financial ratio indicates how much after-tax profit is generated by each dollar of sales?

Accepted Answer

A)  return on investment 
B)  return on equity 
C)  gross profit margin 
D)  net profit margin 
E)  inventory to net working capital 
A)  return on investment 
B)  return on equity 
C)  gross profit margin 
D)  net profit margin 
E)  inventory to net working capital

Question 7

Which financial indicator is calculated by the ratio of market price per share to earnings per share?

Accepted Answer

A)  return on investment 
B)  price/earnings ratio 
C)  return on equity 
D)  dividend yield on common stock 
E)  dividend payout ratio 
A)  return on investment 
B)  price/earnings ratio 
C)  return on equity 
D)  dividend yield on common stock 
E)  dividend payout ratio

Question 8

Converting categories on financial statements from dollar terms to percentages results in

Accepted Answer

A)  inflation-adjusted statements. 
B)  diverse rates of returns. 
C)  common-size statements. 
D)  constant dollar denominations. 
E)  equivalency comparison. 
A)  inflation-adjusted statements. 
B)  diverse rates of returns. 
C)  common-size statements. 
D)  constant dollar denominations. 
E)  equivalency comparison.

Question 9

Which financial ratio measures the rate of return on the book value of shareholders' total investment in the company?

Accepted Answer

A)  return on investment 
B)  return on equity 
C)  gross profit margin 
D)  net profit margin 
E)  earnings per share 
A)  return on investment 
B)  return on equity 
C)  gross profit margin 
D)  net profit margin 
E)  earnings per share

Question 10

Which financial ratio measures the utilization of plant and equipment?

Accepted Answer

A)  days of inventory 
B)  asset turnover 
C)  average collection period 
D)  fixed asset turnover 
E)  inventory turnover 
A)  days of inventory 
B)  asset turnover 
C)  average collection period 
D)  fixed asset turnover 
E)  inventory turnover

Question 11

Which financial ratio measures the extent to which borrowed funds have been used to finance the company's assets?

Accepted Answer

A)  debt to asset ratio 
B)  debt to equity ratio 
C)  long-term debt to capital structure 
D)  times interest earned 
E)  current liabilities to equity 
A)  debt to asset ratio 
B)  debt to equity ratio 
C)  long-term debt to capital structure 
D)  times interest earned 
E)  current liabilities to equity

Question 12

To get a proper picture of the position of the organization, common-size statements and ratios should be compared to

Accepted Answer

A)  the organization's future historical performance. 
B)  the leading competitor in the industry. 
C)  the financial performance of the overall U.S. gross domestic product (GDP). 
D)  the direct competitor least like the organization. 
E)  industry-wide average trends. 
A)  the organization's future historical performance. 
B)  the leading competitor in the industry. 
C)  the financial performance of the overall U.S. gross domestic product (GDP). 
D)  the direct competitor least like the organization. 
E)  industry-wide average trends.

Question 13

When preparing a case analysis, you should always undertake outside research and go beyond the decision date of the case.

Accepted Answer

A) True 
 B)False

Question 14

According to the Yankelovich Partners survey firm, eight out of ten portfolio managers and 75 percent of security analysts use annual reports when making decisions.

Accepted Answer

A) True 
 B)False

Question 15

Which financial ratio is a measure of the ability of the company to meet all of its fixed-charge obligations?

Accepted Answer

A)  debt to asset ratio 
B)  debt to equity ratio 
C)  times interest earned 
D)  long-term debt to capital structure 
E)  coverage of fixed charges 
A)  debt to asset ratio 
B)  debt to equity ratio 
C)  times interest earned 
D)  long-term debt to capital structure 
E)  coverage of fixed charges

Question 16

The debt to asset ratio measures the extent to which borrowed funds have been used to finance the company's assets.

Accepted Answer

A) True 
 B)False

Question 17

"Earnings per share" is an example of a(n)

Accepted Answer

A)  leverage ratio. 
B)  liquidity ratio 
C)  activity ratio. 
D)  asset management ratio. 
E)  profitability ratio. 
A)  leverage ratio. 
B)  liquidity ratio 
C)  activity ratio. 
D)  asset management ratio. 
E)  profitability ratio.

Question 18

Return on equity

Accepted Answer

A)  is an activity ratio. 
B)  shows how much after-tax profits are generated by each dollar of sales. 
C)  is referred to by the acronym ROI. 
D)  measures the rate of return on the book value of shareholders' total investment in the company. 
E)  is a leverage ratio. 
A)  is an activity ratio. 
B)  shows how much after-tax profits are generated by each dollar of sales. 
C)  is referred to by the acronym ROI. 
D)  measures the rate of return on the book value of shareholders' total investment in the company. 
E)  is a leverage ratio.

Question 19

Which financial ratio measures the number of times that average inventory of finished goods was turned over or sold during a period of time?

Accepted Answer

A)  days of inventory 
B)  asset turnover 
C)  average collection period 
D)  fixed asset turnover 
E)  inventory turnover 
A)  days of inventory 
B)  asset turnover 
C)  average collection period 
D)  fixed asset turnover 
E)  inventory turnover

Question 20

In performing a basic financial analysis, what five steps should be taken?

Accepted Answer

At a minimum, in performing a basic fina

Which financial ratio indicates the ability of the company to meet its annual interest costs?

All of the following ratios represent activity ratios EXCEPT

A typical financial analysis would compare the firm under study with industry standards.

In case analysis, it is best to make an exhibit that includes all the financial ratios.

What is the Z-value?

Which financial ratio indicates how much after-tax profit is generated by each dollar of sales?

Which financial indicator is calculated by the ratio of market price per share to earnings per share?

Converting categories on financial statements from dollar terms to percentages results in

Which financial ratio measures the rate of return on the book value of shareholders' total investment in the company?

Which financial ratio measures the utilization of plant and equipment?

Which financial ratio measures the extent to which borrowed funds have been used to finance the company's assets?

To get a proper picture of the position of the organization, common-size statements and ratios should be compared to

When preparing a case analysis, you should always undertake outside research and go beyond the decision date of the case.

According to the Yankelovich Partners survey firm, eight out of ten portfolio managers and 75 percent of security analysts use annual reports when making decisions.

Which financial ratio is a measure of the ability of the company to meet all of its fixed-charge obligations?

The debt to asset ratio measures the extent to which borrowed funds have been used to finance the company's assets.

"Earnings per share" is an example of a(n)

Return on equity

Which financial ratio measures the number of times that average inventory of finished goods was turned over or sold during a period of time?

In performing a basic financial analysis, what five steps should be taken?

Basic Concepts in Strategic Management

Corporate Governance

Social Responsibility and Ethics in Strategic Management

Environmental Scanning and Industry Analysis

Organizational Analysis and Competitive Advantage

Strategy Formulation: Business Strategy

Strategy Formulation: Corporate Strategy

Strategy Formulation: Functional Strategy and Strategic Choice

Strategy Implementation: Global Strategy

Strategy Implementation: Organizing and Structure

Strategy Implementation: Staffing and Directing

Evaluation and Control

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Exam 13: Suggestions for Case Analysis

Which financial ratio indicates the ability of the company to meet its annual interest costs?

All of the following ratios represent activity ratios EXCEPT

A typical financial analysis would compare the firm under study with industry standards.

In case analysis, it is best to make an exhibit that includes all the financial ratios.

What is the Z-value?

Which financial ratio indicates how much after-tax profit is generated by each dollar of sales?

Which financial indicator is calculated by the ratio of market price per share to earnings per share?

Converting categories on financial statements from dollar terms to percentages results in

Which financial ratio measures the rate of return on the book value of shareholders' total investment in the company?

Which financial ratio measures the utilization of plant and equipment?

Which financial ratio measures the extent to which borrowed funds have been used to finance the company's assets?

To get a proper picture of the position of the organization, common-size statements and ratios should be compared to

When preparing a case analysis, you should always undertake outside research and go beyond the decision date of the case.

According to the Yankelovich Partners survey firm, eight out of ten portfolio managers and 75 percent of security analysts use annual reports when making decisions.

Which financial ratio is a measure of the ability of the company to meet all of its fixed-charge obligations?

The debt to asset ratio measures the extent to which borrowed funds have been used to finance the company's assets.

"Earnings per share" is an example of a(n)

Return on equity

Which financial ratio measures the number of times that average inventory of finished goods was turned over or sold during a period of time?

In performing a basic financial analysis, what five steps should be taken?

Basic Concepts in Strategic Management

Corporate Governance

Social Responsibility and Ethics in Strategic Management

Environmental Scanning and Industry Analysis

Organizational Analysis and Competitive Advantage

Strategy Formulation: Business Strategy

Strategy Formulation: Corporate Strategy

Strategy Formulation: Functional Strategy and Strategic Choice

Strategy Implementation: Global Strategy

Strategy Implementation: Organizing and Structure

Strategy Implementation: Staffing and Directing

Evaluation and Control

Filters