Question 1

The receivables turnover ratio is measured as:

Accepted Answer

A)  Sales plus accounts receivable. 
B)  Sales divided by accounts receivable. 
C)  Sales minus accounts receivable, divided by sales. 
D)  Accounts receivable times sales. 
E)  Accounts receivable divided by sales. 
A)  Sales plus accounts receivable. 
B)  Sales divided by accounts receivable. 
C)  Sales minus accounts receivable, divided by sales. 
D)  Accounts receivable times sales. 
E)  Accounts receivable divided by sales.

Question 2

The following statement of financial position and statement of comprehensive income should be used.     What is Woodburn's return on assets for 2018?

Accepted Answer

A)  18.50 % 
B)  18.67 % 
C)  19.89 % 
D)  20.18 % 
E)  20.70 % 
A)  18.50 % 
B)  18.67 % 
C)  19.89 % 
D)  20.18 % 
E)  20.70 %

Question 3

Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 17%; total asset turnover 0.88; return on equity 17.95%.

Accepted Answer

A)  1.6 
B)  1.4 
C)  1.2 
D)  1.0 
E)  0.8 
A)  1.6 
B)  1.4 
C)  1.2 
D)  1.0 
E)  0.8

Question 4

Calculate the cash ratio given the following information: current ratio = 2; total current assets = $10,000; cash and cash equivalents = $1,250.

Accepted Answer

A)  0.21 
B)  0.22 
C)  0.23 
D)  0.24 
E)  0.25 
A)  0.21 
B)  0.22 
C)  0.23 
D)  0.24 
E)  0.25

Question 5

How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?

Accepted Answer

A)  $15,000 source; $8,000 use 
B)  $15,000 use; $8,000 source 
C)  $7,000 use 
D)  $23,000 use 
E)  $23,000 source 
A)  $15,000 source; $8,000 use 
B)  $15,000 use; $8,000 source 
C)  $7,000 use 
D)  $23,000 use 
E)  $23,000 source

Question 6

What is the quick ratio for Young for 2017?

Accepted Answer

A)  0.57 
B)  0.63 
C)  0.76 
D)  1.13 
E)  1.33 
A)  0.57 
B)  0.63 
C)  0.76 
D)  1.13 
E)  1.33

Question 7

A statement that expresses each account as a percentage of sales is called a:

Accepted Answer

A)  Common-size statement of financial position. 
B)  Common-size statement of comprehensive income. 
C)  Common-size statement of cash flows. 
D)  Ratio statement of comprehensive income. 
E)  Statement of ratio analysis. 
A)  Common-size statement of financial position. 
B)  Common-size statement of comprehensive income. 
C)  Common-size statement of cash flows. 
D)  Ratio statement of comprehensive income. 
E)  Statement of ratio analysis.

Question 8

The Enterprise Multiple is measured as:

Accepted Answer

A)  Total asset divided by net income. 
B)  Total asset divided by EBIT. 
C)  Enterprise value divided by EBIT. 
D)  Enterprise value divided by EBITDA. 
E)  Market value of equity divided by EBIT. 
A)  Total asset divided by net income. 
B)  Total asset divided by EBIT. 
C)  Enterprise value divided by EBIT. 
D)  Enterprise value divided by EBITDA. 
E)  Market value of equity divided by EBIT.

Question 9

A common-size statement of comprehensive income is defined as a financial statement wherein all items are expressed as a percentage of:

Accepted Answer

A)  Their prior year's value. 
B)  Their projected value. 
C)  Their 5-year average value. 
D)  Total assets. 
E)  Sales. 
A)  Their prior year's value. 
B)  Their projected value. 
C)  Their 5-year average value. 
D)  Total assets. 
E)  Sales.

Question 10

A financial manager who needs to find out how long it will take before their firm runs out of cash if no further cash comes in should consider the ________________.

Accepted Answer

A)  Current ratio. 
B)  Quick ratio. 
C)  Cash ratio. 
D)  Net working capital to total assets ratio. 
E)  Interval measure. 
A)  Current ratio. 
B)  Quick ratio. 
C)  Cash ratio. 
D)  Net working capital to total assets ratio. 
E)  Interval measure.

Question 11

Which of the following would be considered a use of cash?

Accepted Answer

A)  Accounts receivable increase. 
B)  Accounts payable increase. 
C)  Common stock increase. 
D)  Revenue increase. 
E)  Net fixed assets decrease by the amount of depreciation. 
A)  Accounts receivable increase. 
B)  Accounts payable increase. 
C)  Common stock increase. 
D)  Revenue increase. 
E)  Net fixed assets decrease by the amount of depreciation.

Question 12

Calculate the return on assets given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.

Accepted Answer

A)  21% 
B)  22% 
C)  23% 
D)  24% 
E)  25% 
A)  21% 
B)  22% 
C)  23% 
D)  24% 
E)  25%

Question 13

Calculate sales given the following data. Total fixed assets $400,000; long-term liabilities $155,000; total liabilities $280,000; total shareholders' equity $320,000; net working capital turnover 20.

Accepted Answer

A)  $1,500,000 
B)  $1,700,000 
C)  $1,900,000 
D)  $2,100,000 
E)  $2,250,000 
A)  $1,500,000 
B)  $1,700,000 
C)  $1,900,000 
D)  $2,100,000 
E)  $2,250,000

Question 14

Calculate net income given the following information: shares outstanding = 1,000,000; stock price = $18/share; PE ratio = 20.

Accepted Answer

A)  $750,000 
B)  $800,000 
C)  $850,000 
D)  $900,000 
E)  $950,000 
A)  $750,000 
B)  $800,000 
C)  $850,000 
D)  $900,000 
E)  $950,000

Question 15

Second Cups has a price-earnings ratio of 16. Tam Hortons has a price-earnings ratio of 19. Thus, you can state with certainty that one share of stock in Tam Hortons':

Accepted Answer

A)  Has a higher market price than one share of stock in Second Cups. 
B)  Has a higher market price per dollar of earnings than one share of Second Cups. 
C)  Sells at a lower price per share than one share of Second Cups. 
D)  Represents a larger percentage of firm ownership than does one share of Second Cups' stock. 
E)  Earns a greater profit per share than does one share of Second Cups' stock. 
A)  Has a higher market price than one share of stock in Second Cups. 
B)  Has a higher market price per dollar of earnings than one share of Second Cups. 
C)  Sells at a lower price per share than one share of Second Cups. 
D)  Represents a larger percentage of firm ownership than does one share of Second Cups' stock. 
E)  Earns a greater profit per share than does one share of Second Cups' stock.

Question 16

Ajax Corporation's total current assets are valued at $135,000 and are comprised of cash, accounts receivable and inventory. Determine the value of the cash account given the following information: sales = $800,000; cost of goods sold = $300,000; accounts receivable turnover = 32 times; inventory turnover = 10 times.

Accepted Answer

A)  $70,000 
B)  $75,000 
C)  $80,000 
D)  $85,000 
E)  $90,000 
A)  $70,000 
B)  $75,000 
C)  $80,000 
D)  $85,000 
E)  $90,000

Question 17

The sources of cash include ($ in millions):

Accepted Answer

A)  $220 from accounts payable and $840 from fixed assets. 
B)  $840 from fixed assets and $70 from accounts receivable. 
C)  $70 from accounts receivable and $1,540 from common stock. 
D)  $1,540 from common stock and $220 from accounts payable. 
E)  $2,125 from long term debt and $1,540 from common stock. 
A)  $220 from accounts payable and $840 from fixed assets. 
B)  $840 from fixed assets and $70 from accounts receivable. 
C)  $70 from accounts receivable and $1,540 from common stock. 
D)  $1,540 from common stock and $220 from accounts payable. 
E)  $2,125 from long term debt and $1,540 from common stock.

Question 18

If shareholders want to know how much profit a firm is making on their entire investment in the firm, the shareholders should look at the:

Accepted Answer

A)  Profit margin. 
B)  Return on assets. 
C)  Return on equity. 
D)  Equity multiplier. 
E)  Earnings per share. 
A)  Profit margin. 
B)  Return on assets. 
C)  Return on equity. 
D)  Equity multiplier. 
E)  Earnings per share.

Question 19

A Kingston firm has net working capital of $2,580, net fixed assets of $13,120, sales of $22,580, and current liabilities of $1,610. How many dollars' worth of sales are generated from every $1 in total assets?

Accepted Answer

A)  $1.27 
B)  $1.30 
C)  $1.67 
D)  $1.72 
E)  $1.75 
A)  $1.27 
B)  $1.30 
C)  $1.67 
D)  $1.72 
E)  $1.75

Question 20

A supplier, who requires payment within ten days, is most concerned with which one of the following ratios when granting credit?

Accepted Answer

A)  current 
B)  cash 
C)  debt-equity 
D)  quick 
E)  total debt 
A)  current 
B)  cash 
C)  debt-equity 
D)  quick 
E)  total debt

Exam 3: Working With Financial Statements

The receivables turnover ratio is measured as:

The following statement of financial position and statement of comprehensive income should be used. What is Woodburn's return on assets for 2018?

Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 17%; total asset turnover 0.88; return on equity 17.95%.

Calculate the cash ratio given the following information: current ratio = 2; total current assets = $10,000; cash and cash equivalents = $1,250.

How would a $15,000 decrease in AR and a $8,000 increase in inventory affect cash?

What is the quick ratio for Young for 2017?

A statement that expresses each account as a percentage of sales is called a:

The Enterprise Multiple is measured as:

A common-size statement of comprehensive income is defined as a financial statement wherein all items are expressed as a percentage of:

A financial manager who needs to find out how long it will take before their firm runs out of cash if no further cash comes in should consider the ________________.

Which of the following would be considered a use of cash?

Calculate the return on assets given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.

Calculate sales given the following data. Total fixed assets $400,000; long-term liabilities $155,000; total liabilities $280,000; total shareholders' equity $320,000; net working capital turnover 20.

Calculate net income given the following information: shares outstanding = 1,000,000; stock price = $18/share; PE ratio = 20.

Second Cups has a price-earnings ratio of 16. Tam Hortons has a price-earnings ratio of 19. Thus, you can state with certainty that one share of stock in Tam Hortons':

The sources of cash include ($ in millions):

If shareholders want to know how much profit a firm is making on their entire investment in the firm, the shareholders should look at the:

A Kingston firm has net working capital of $2,580, net fixed assets of $13,120, sales of $22,580, and current liabilities of $1,610. How many dollars' worth of sales are generated from every $1 in total assets?

A supplier, who requires payment within ten days, is most concerned with which one of the following ratios when granting credit?

Introduction to Corporate Finance

Financial Statements, Cash Flow, and Taxes

Long-Term Financial Planning and Corporate Growth

Introduction to Valuation: the Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Dividend Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Leasing

Mergers and Acquisitions

Enterprise Risk Management

Options and Corporate Securities

Behavioural Finance: Implications for Financial Management

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