Exam 5: Evaluating Operating and Financial Performance

Using the following information, determine the average monthly net cash burn rate: annual net income = $20,000; annual interest = $10,000; annual cash build = $150,000; and annual cash burn = $186,000.

Runs and Goses operating profit margin is?

What is the return on equity for Runs and Goses?

Leverage ratios are generally considered to be more important during the survival and rapid-growth stages compared to the development and startup stages.

The equity multiplier shows the extent by which assets are supported by equity and debt.

If a firm has positive net income, a drop in a venture's asset intensity ratio will increase its ROE.

Last year, Nemo's Fish 'n Chips recorded the following financial data: sales = $85,000; cost of goods sold = $45,000; selling and administrative expenses = $25,000; depreciation and amortization = $7,000; interest expense = $12,000. The tax rate was 30%. Find Nemo's interest coverage for last year.

The extent to which a venture is in debt and in its ability to repay its debt obligations is indicated by leverage ratios.

The "cash burn rate" is the cash burn for a fixed period of time, typically a month.

The difference between a venture's ability to generate cash to pay interest and the amount of interest it has to pay is determined by which of the following ratios?

Which of the following is used to examine a venture's performance over time?

Net income divided by net sales is called which of the following ratios?

Which of the following is used to compare a venture's performance against another firm at the same point in time?

Investment bankers are users of financial ratios and measures of ventures primarily during the rapid-growth stage relative to the development and startup stages.

How efficiently a venture controls its expenses and uses its assets and debt is evaluated with profitability and efficiency ratios.

What is the current ratio for Runs and Goses?

Trend analysis is used to examine a venture's performance over time.

Which of the following is used to compare a venture's performance against the average performance of other firms in the same industry?

During the development and startup stages of a venture's life cycle, important users of financial ratios and measures include the entrepreneur, business angels, and venture capitalists VCs).

Last year, Lenny's Lemonade had $3,500 in sales, and cost of goods sold was $2,000. Depreciation expenses totaled $500 and interest expense was $700. If the tax rate is 25%, what is the net profit margin for Lenny's Lemonade? What is its NOPAT margin?