Question 1

On a common-base year financial statement, all accounts are expressed relative to the base:

Accepted Answer

A)  Year amount. 
B)  Amount of sales. 
C)  Amount of total assets. 
D)  Net income. 
E)  Net cash flow. 
A)  Year amount. 
B)  Amount of sales. 
C)  Amount of total assets. 
D)  Net income. 
E)  Net cash flow.

Question 2

In the base year, Marley Enterprises of Vancouver had cash of $560, accounts receivable of $2,650, inventory of $4,680, and fixed assets of $12,600. This year the firm has cash of $630, accounts receivable of $3,280, inventory of $5,101, and fixed assets of $15,850. What is the common-base year value of the inventory?

Accepted Answer

A)  .25 
B)  .57 
C)  .65 
D)  1.09 
E)  1.30 
A)  .25 
B)  .57 
C)  .65 
D)  1.09 
E)  1.30

Question 3

Which ratio is not a measure of long-term solvency?

Accepted Answer

A)  Total debt ratio. 
B)  Price-earnings ratio. 
C)  Debt/equity ratio. 
D)  Equity multiplier 
E)  Times interest earned. 
A)  Total debt ratio. 
B)  Price-earnings ratio. 
C)  Debt/equity ratio. 
D)  Equity multiplier 
E)  Times interest earned.

Question 4

A total asset turnover measure of 1.03 means that a firm has $1.03 in:

Accepted Answer

A)  Total assets for every $1 in cash. 
B)  Total assets for every $1 in total debt. 
C)  Total assets for every $1 in equity. 
D)  Sales for every $1 in total assets. 
E)  Long-term assets for every $1 in short-term assets. 
A)  Total assets for every $1 in cash. 
B)  Total assets for every $1 in total debt. 
C)  Total assets for every $1 in equity. 
D)  Sales for every $1 in total assets. 
E)  Long-term assets for every $1 in short-term assets.

Question 5

Use the following statement of financial position and statement of comprehensive income     What is the net cash flow from investment activity for 2018?

Accepted Answer

A)  $450 cash outflow 
B)  $560 cash outflow 
C)  $870 cash outflow 
D)  $1,240 cash outflow 
E)  $1,570 cash outflow 
A)  $450 cash outflow 
B)  $560 cash outflow 
C)  $870 cash outflow 
D)  $1,240 cash outflow 
E)  $1,570 cash outflow

Question 6

Smith & Sons has a debt-equity ratio of.55. What is the total debt ratio?

Accepted Answer

A)  .35 
B)  .46 
C)  .49 
D)  .51 
E)  .55 
A)  .35 
B)  .46 
C)  .49 
D)  .51 
E)  .55

Question 7

In a common size statement, the statement of financial position may be expressed as a percentage of ____________ while the statement of comprehensive income may be expressed as a percentage of ____________.

Accepted Answer

A)  liabilities plus equity; net income 
B)  assets; net income 
C)  sales; liabilities plus equity 
D)  liabilities plus equity; sales 
E)  liabilities; sales 
A)  liabilities plus equity; net income 
B)  assets; net income 
C)  sales; liabilities plus equity 
D)  liabilities plus equity; sales 
E)  liabilities; sales

Question 8

A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?

Accepted Answer

A)  $480 
B)  $530 
C)  $560 
D)  $580 
E)  $600 
A)  $480 
B)  $530 
C)  $560 
D)  $580 
E)  $600

Question 9

The financial ratio measured as EBIT plus depreciation, divided by interest expense, is the:

Accepted Answer

A)  Cash coverage ratio. 
B)  Debt-equity ratio. 
C)  Times interest earned ratio. 
D)  Gross margin. 
E)  Total debt ratio. 
A)  Cash coverage ratio. 
B)  Debt-equity ratio. 
C)  Times interest earned ratio. 
D)  Gross margin. 
E)  Total debt ratio.

Question 10

During the year, Douglass Industries decreased the accounts receivable by $230, decreased the inventory by $150, and increased the accounts payable by $110. These three changes represent a _____ of cash.

Accepted Answer

A)  $270 use 
B)  $490 use 
C)  $190 source 
D)  $270 source 
E)  $490 source 
A)  $270 use 
B)  $490 use 
C)  $190 source 
D)  $270 source 
E)  $490 source

Question 11

A firm has a debt-equity ratio of.56. What is the total debt ratio?

Accepted Answer

A)  0.29 
B)  0.36 
C)  0.44 
D)  1.44 
E)  1.56 
A)  0.29 
B)  0.36 
C)  0.44 
D)  1.44 
E)  1.56

Question 12

The PE ratio is defined as:

Accepted Answer

A)  Dividends per share divided by earnings per share. 
B)  Earnings per share divided by dividends per share. 
C)  Price per share divided by earnings per share. 
D)  Earnings per share divided by price per share. 
E)  Price per share divided by equity per share. 
A)  Dividends per share divided by earnings per share. 
B)  Earnings per share divided by dividends per share. 
C)  Price per share divided by earnings per share. 
D)  Earnings per share divided by price per share. 
E)  Price per share divided by equity per share.

Question 13

An increase in a(n) _____________ account would be considered a(n) __________ of funds.

Accepted Answer

A)  Asset; source 
B)  Liability; source 
C)  Liabilities; use 
D)  Expense; source 
E)  Revenues; use 
A)  Asset; source 
B)  Liability; source 
C)  Liabilities; use 
D)  Expense; source 
E)  Revenues; use

Question 14

What was the return on equity for 2018?

Accepted Answer

A)  18.3% 
B)  26.1% 
C)  31.4% 
D)  44.8% 
E)  62.6% 
A)  18.3% 
B)  26.1% 
C)  31.4% 
D)  44.8% 
E)  62.6%

Question 15

If you were to prepare a statement of cash flows, what is the cash flow from investment activities ($ in millions)?

Accepted Answer

A)  -$1,500 
B)  -$2,400 
C)  -$3,400 
D)  $4,500 
E)  $4,600 
A)  -$1,500 
B)  -$2,400 
C)  -$3,400 
D)  $4,500 
E)  $4,600

Question 16

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?

Accepted Answer

A)  $2,568 
B)  $3,819 
C)  $4,186 
D)  $6,283 
E)  $6,420 
A)  $2,568 
B)  $3,819 
C)  $4,186 
D)  $6,283 
E)  $6,420

Question 17

The function described as the profit margin times the total asset turnover times the equity multiplier is known as the:

Accepted Answer

A)  Du Pont identity. 
B)  Return on assets. 
C)  Statement of cash flows. 
D)  Asset turnover ratio. 
E)  Interval measure. 
A)  Du Pont identity. 
B)  Return on assets. 
C)  Statement of cash flows. 
D)  Asset turnover ratio. 
E)  Interval measure.

Question 18

What was the greatest use of funds for Bo Knows Profit Corp.?

Accepted Answer

A)  Increase in accounts receivable. 
B)  Decrease in accounts payable. 
C)  Acquisition of more fixed assets. 
D)  Dividends. 
E)  Sale of inventory. 
A)  Increase in accounts receivable. 
B)  Decrease in accounts payable. 
C)  Acquisition of more fixed assets. 
D)  Dividends. 
E)  Sale of inventory.

Question 19

A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:

Accepted Answer

A)  $1.00 in equity. 
B)  $1.00 in total sales. 
C)  $1.00 in current assets. 
D)  $0.53 in equity. 
E)  $0.53 in total assets. 
A)  $1.00 in equity. 
B)  $1.00 in total sales. 
C)  $1.00 in current assets. 
D)  $0.53 in equity. 
E)  $0.53 in total assets.

Question 20

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

Accepted Answer

A)  $118,048 
B)  $119,600 
C)  $120,202 
D)  $121,212 
E)  $124,097 
A)  $118,048 
B)  $119,600 
C)  $120,202 
D)  $121,212 
E)  $124,097

Exam 3: Working With Financial Statements

On a common-base year financial statement, all accounts are expressed relative to the base:

Which ratio is not a measure of long-term solvency?

A total asset turnover measure of 1.03 means that a firm has $1.03 in:

Use the following statement of financial position and statement of comprehensive income What is the net cash flow from investment activity for 2018?

Smith & Sons has a debt-equity ratio of.55. What is the total debt ratio?

In a common size statement, the statement of financial position may be expressed as a percentage of ____________ while the statement of comprehensive income may be expressed as a percentage of ____________.

A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?

The financial ratio measured as EBIT plus depreciation, divided by interest expense, is the:

During the year, Douglass Industries decreased the accounts receivable by $230, decreased the inventory by $150, and increased the accounts payable by $110. These three changes represent a _____ of cash.

A firm has a debt-equity ratio of.56. What is the total debt ratio?

The PE ratio is defined as:

An increase in a(n) _____________ account would be considered a(n) __________ of funds.

What was the return on equity for 2018?

If you were to prepare a statement of cash flows, what is the cash flow from investment activities ($ in millions)?

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?

The function described as the profit margin times the total asset turnover times the equity multiplier is known as the:

What was the greatest use of funds for Bo Knows Profit Corp.?

A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

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

Filters

In a common size statement, the statement of financial position may be expressed as a percentage of while the statement of comprehensive income may be expressed as a percentage of .

An increase in a(n) ___ account would be considered a(n) of funds.