Question 1

The inventory turnover ratio is measured as:

Accepted Answer

A)  Total sales minus inventory. 
B)  Inventory times total sales. 
C)  Cost of goods sold divided by inventory. 
D)  Inventory times cost of goods sold. 
E)  Inventory plus cost of goods sold. 
A)  Total sales minus inventory. 
B)  Inventory times total sales. 
C)  Cost of goods sold divided by inventory. 
D)  Inventory times cost of goods sold. 
E)  Inventory plus cost of goods sold.

Question 2

Calculate the value of long-term debt given the following information: total debt = $320,000; debt/equity ratio = 0.80; long-term debt ratio = 0.3750.

Accepted Answer

A)  $230,000 
B)  $235,000 
C)  $240,000 
D)  $245,000 
E)  $250,000 
A)  $230,000 
B)  $235,000 
C)  $240,000 
D)  $245,000 
E)  $250,000

Question 3

A decrease in which one of the following is a source of cash?

Accepted Answer

A)  Common stock. 
B)  Notes payable. 
C)  Inventory. 
D)  Retained earnings. 
E)  Long-term debt. 
A)  Common stock. 
B)  Notes payable. 
C)  Inventory. 
D)  Retained earnings. 
E)  Long-term debt.

Question 4

Curly Industries generated net income of $980 for the year. The depreciation expense was $120 and dividends paid were $250. The accounts payable decreased by $60, accounts receivable decreased by $20, inventory increased by $80, and net fixed assets increased by $360. What is the net cash flow from operating activity?

Accepted Answer

A)  $940 
B)  $950 
C)  $980 
D)  $1,100 
E)  $1,140 
A)  $940 
B)  $950 
C)  $980 
D)  $1,100 
E)  $1,140

Question 5

In the most general sense, which of the following would you expect to be true?

Accepted Answer

A)  If a current asset account and a current liability account both increase by the same amount, there is a net use of funds. 
B)  If fixed assets decrease by the amount of depreciation for the year, there is a net use of funds. 
C)  Changes in income and expense accounts do not affect sources and uses of funds. 
D)  If a liability account increases and an asset account decreases by the same amount, there is a net source of funds. 
E)  If the common stock outstanding increases there is a use of funds. 
A)  If a current asset account and a current liability account both increase by the same amount, there is a net use of funds. 
B)  If fixed assets decrease by the amount of depreciation for the year, there is a net use of funds. 
C)  Changes in income and expense accounts do not affect sources and uses of funds. 
D)  If a liability account increases and an asset account decreases by the same amount, there is a net source of funds. 
E)  If the common stock outstanding increases there is a use of funds.

Question 6

Without making reference to its formula, provide a definition of days' sales in inventory.

Accepted Answer

A measure of a company's inventory perfo

Question 7

What is the debt-equity ratio for 2017?

Accepted Answer

A)  0.48 
B)  0.91 
C)  1.12 
D)  2.15 
E)  2.32 
A)  0.48 
B)  0.91 
C)  1.12 
D)  2.15 
E)  2.32

Question 8

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

Question 9

The following statement of financial position and statement of comprehensive income should be used.     How many dollars of sales are being generated by every $1 that Woodburn has in total assets($ in thousands)? (Use 2018 assets)

Accepted Answer

A)  $1.01 
B)  $1.07 
C)  $1.09 
D)  $1.12 
E)  $1.16 
A)  $1.01 
B)  $1.07 
C)  $1.09 
D)  $1.12 
E)  $1.16

Question 10

Use the following statement of financial position and statement of comprehensive income     What is the equity multiplier for Bluebird for 2018?

Accepted Answer

A)  1.53 
B)  1.56 
C)  1.59 
D)  1.61 
E)  1.64 
A)  1.53 
B)  1.56 
C)  1.59 
D)  1.61 
E)  1.64

Question 11

During 2018, the quick ratio:

Accepted Answer

A)  Increased. 
B)  Decreased. 
C)  Remained constant. 
D)  Changed, but the direction of the change cannot be determined. 
E)  None of the choices are correct. 
A)  Increased. 
B)  Decreased. 
C)  Remained constant. 
D)  Changed, but the direction of the change cannot be determined. 
E)  None of the choices are correct.

Question 12

Ratios that measure how efficiently a firm uses its assets to generate sales are known as:

Accepted Answer

A)  Asset management ratios. 
B)  Long-term solvency ratios. 
C)  Short-term solvency ratios. 
D)  Profitability ratios. 
E)  Market value ratios. 
A)  Asset management ratios. 
B)  Long-term solvency ratios. 
C)  Short-term solvency ratios. 
D)  Profitability ratios. 
E)  Market value ratios.

Question 13

Return on assets is defined as:

Accepted Answer

A)  Sales divided by net fixed assets. 
B)  EBIT divided by net fixed assets. 
C)  Net income divided by net fixed assets. 
D)  EBIT divided by total assets. 
E)  Net income divided by total assets. 
A)  Sales divided by net fixed assets. 
B)  EBIT divided by net fixed assets. 
C)  Net income divided by net fixed assets. 
D)  EBIT divided by total assets. 
E)  Net income divided by total assets.

Question 14

Square D's has $42,700 in sales and a profit margin of 7.2 %. There are 5,700 shares of stock outstanding at a market price per share of $13.20. What is the price-earnings ratio?

Accepted Answer

A)  7.12 
B)  17.63 
C)  24.47 
D)  26.08 
E)  29.00 
A)  7.12 
B)  17.63 
C)  24.47 
D)  26.08 
E)  29.00

Question 15

The equity multiplier ratio is measured as:

Accepted Answer

A)  Total equity divided by total assets. 
B)  Total equity plus total debt. 
C)  Total assets minus total equity, divided by total assets. 
D)  Total assets plus total equity, divided by total debt. 
E)  Total assets divided by total equity. 
A)  Total equity divided by total assets. 
B)  Total equity plus total debt. 
C)  Total assets minus total equity, divided by total assets. 
D)  Total assets plus total equity, divided by total debt. 
E)  Total assets divided by total equity.

Question 16

The following statement of financial position and statement of comprehensive income should be used.     What is Woodburn's debt-equity ratio for 2018?

Accepted Answer

A)  .39 
B)  .47 
C)  .52 
D)  .55 
E)  .68 
A)  .39 
B)  .47 
C)  .52 
D)  .55 
E)  .68

Question 17

Margo's Dress Shoppe had the following values as of the end of last year and the end of this year. Which of the following are sources of cash for the year?

Accepted Answer

A)  cash and accounts receivable. 
B)  cash and accounts payable. 
C)  accounts receivable and inventory. 
D)  cash, accounts payable, and inventory. 
E)  accounts payable, accounts receivable, and inventory. 
A)  cash and accounts receivable. 
B)  cash and accounts payable. 
C)  accounts receivable and inventory. 
D)  cash, accounts payable, and inventory. 
E)  accounts payable, accounts receivable, and inventory.

Question 18

Which one of the following statements is correct if a firm has a receivables turnover measure of 10?

Accepted Answer

A)  It takes a firm 10 days to collect payment from its customers. 
B)  It takes a firm 36.5 days to sell its inventory and collect the payment from the sale. 
C)  It takes a firm 36.5 days to pay its creditors. 
D)  The firm has an average collection period of 36.5 days. 
E)  The firm has ten times more in accounts receivable than it does in cash. 
A)  It takes a firm 10 days to collect payment from its customers. 
B)  It takes a firm 36.5 days to sell its inventory and collect the payment from the sale. 
C)  It takes a firm 36.5 days to pay its creditors. 
D)  The firm has an average collection period of 36.5 days. 
E)  The firm has ten times more in accounts receivable than it does in cash.

Question 19

Katrina's Fury has $697,400 in sales. The profit margin is 3.4 % and the firm has 12,500 shares of stock outstanding. The market price per share is $33. What is the price-earnings ratio?

Accepted Answer

A)  15.8 
B)  16.2 
C)  16.6 
D)  17.1 
E)  17.4 
A)  15.8 
B)  16.2 
C)  16.6 
D)  17.1 
E)  17.4

Question 20

Determine the value of cash given the following information: cash ratio = 1.5625; cash equivalents = $500 ; current liabilities = $1,600.

Accepted Answer

A)  $1,500 
B)  $2,000 
C)  $2,500 
D)  $3,000 
E)  $3,500 
A)  $1,500 
B)  $2,000 
C)  $2,500 
D)  $3,000 
E)  $3,500

Exam 3: Working With Financial Statements

The inventory turnover ratio is measured as:

Calculate the value of long-term debt given the following information: total debt = $320,000; debt/equity ratio = 0.80; long-term debt ratio = 0.3750.

A decrease in which one of the following is a source of cash?

In the most general sense, which of the following would you expect to be true?

Without making reference to its formula, provide a definition of days' sales in inventory.

What is the debt-equity ratio for 2017?

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.

The following statement of financial position and statement of comprehensive income should be used. How many dollars of sales are being generated by every $1 that Woodburn has in total assets($ in thousands)? (Use 2018 assets)

Use the following statement of financial position and statement of comprehensive income What is the equity multiplier for Bluebird for 2018?

During 2018, the quick ratio:

Ratios that measure how efficiently a firm uses its assets to generate sales are known as:

Return on assets is defined as:

Square D's has $42,700 in sales and a profit margin of 7.2 %. There are 5,700 shares of stock outstanding at a market price per share of $13.20. What is the price-earnings ratio?

The equity multiplier ratio is measured as:

The following statement of financial position and statement of comprehensive income should be used. What is Woodburn's debt-equity ratio for 2018?

Margo's Dress Shoppe had the following values as of the end of last year and the end of this year. Which of the following are sources of cash for the year?

Which one of the following statements is correct if a firm has a receivables turnover measure of 10?

Katrina's Fury has $697,400 in sales. The profit margin is 3.4 % and the firm has 12,500 shares of stock outstanding. The market price per share is $33. What is the price-earnings ratio?

Determine the value of cash given the following information: cash ratio = 1.5625; cash equivalents = $500 ; current liabilities = $1,600.

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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