Question 1

What is the firm's EPS?

Accepted Answer

A)  $3.26 
B)  $3.43 
C)  $3.62 
D)  $3.80 
E)  $3.99 
A)  $3.26 
B)  $3.43 
C)  $3.62 
D)  $3.80 
E)  $3.99

Question 2

Ryngard Corp's sales last year were $38,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO)?

Accepted Answer

A)  2.04 
B)  2.14 
C)  2.26 
D)  2.38 
E)  2.49 
A)  2.04 
B)  2.14 
C)  2.26 
D)  2.38 
E)  2.49

Question 3

A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?

Accepted Answer

A)  Reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment. 
B)  Use cash to repurchase some of the company's own stock. 
C)  Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year. 
D)  Issue new stock, then use some of the proceeds to purchase additional inventory and hold the remainder as cash. 
E)  Use cash to increase inventory holdings. 
A)  Reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment. 
B)  Use cash to repurchase some of the company's own stock. 
C)  Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year. 
D)  Issue new stock, then use some of the proceeds to purchase additional inventory and hold the remainder as cash. 
E)  Use cash to increase inventory holdings.

Question 4

One problem with ratio analysis is that relationships can be manipulated. For example, we know that if our current ratio is less than 1.0, then using some of our cash to pay off some of our current liabilities would cause the current ratio to increase and thus make the firm look stronger.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is CORRECT?

Accepted Answer

A)  A reduction in inventories would have no effect on the current ratio. 
B)  An increase in inventories would have no effect on the current ratio. 
C)  If a firm increases its sales while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase. 
D)  A reduction in the inventory turnover ratio will generally lead to an increase in the ROE. 
E)  If a firm increases its sales while holding its inventories constant, then, other things held constant, its fixed assets turnover ratio will decline. 
A)  A reduction in inventories would have no effect on the current ratio. 
B)  An increase in inventories would have no effect on the current ratio. 
C)  If a firm increases its sales while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase. 
D)  A reduction in the inventory turnover ratio will generally lead to an increase in the ROE. 
E)  If a firm increases its sales while holding its inventories constant, then, other things held constant, its fixed assets turnover ratio will decline.

Question 6

Last year Blease Inc had a total assets turnover of 1.33 and an equity multiplier of 1.75. Its sales were $295,000 and its net income was $10,600. The CFO believes that the company could have operated more efficiently, lowered its costs, and increased its net income by $10,250 without changing its sales, assets, or capital structure. Had it cut costs and increased its net income by this amount, how much would the ROE have changed?

Accepted Answer

A)  6.55% 
B)  7.28% 
C)  8.09% 
D)  8.90% 
E)  9.79% 
A)  6.55% 
B)  7.28% 
C)  8.09% 
D)  8.90% 
E)  9.79%

Question 7

What is the firm's ROE?

Accepted Answer

A)  13.21% 
B)  13.91% 
C)  14.60% 
D)  15.33% 
E)  16.10% 
A)  13.21% 
B)  13.91% 
C)  14.60% 
D)  15.33% 
E)  16.10%

What is the firm's EPS?

Ryngard Corp's sales last year were $38,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO)?

A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?

One problem with ratio analysis is that relationships can be manipulated. For example, we know that if our current ratio is less than 1.0, then using some of our cash to pay off some of our current liabilities would cause the current ratio to increase and thus make the firm look stronger.

Which of the following statements is CORRECT?

What is the firm's ROE?

Overview

Financial Markets

Financial Statements

Time Value of Money

Forecasting

Interest Rates

Risk and Return

Bonds

Stocks

Cost of Capital

Capital Budgeting Mc Problems

Cash Flow and Risk

Real Options

Capital Structure

Dividends

Working Capital

Derivatives

Multinational

Hybrid Financing

Mergers

Filters

Exam 4: Statement Analysis

What is the firm's EPS?

Ryngard Corp's sales last year were $38,000, and its total assets were $16,000. What was its total assets turnover ratio (TATO)?

A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?

One problem with ratio analysis is that relationships can be manipulated. For example, we know that if our current ratio is less than 1.0, then using some of our cash to pay off some of our current liabilities would cause the current ratio to increase and thus make the firm look stronger.

Which of the following statements is CORRECT?

What is the firm's ROE?

Overview

Financial Markets

Financial Statements

Time Value of Money

Forecasting

Interest Rates

Risk and Return

Bonds

Stocks

Cost of Capital

Capital Budgeting Mc Problems

Cash Flow and Risk

Real Options

Capital Structure

Dividends

Working Capital

Derivatives

Multinational

Hybrid Financing

Mergers

Filters