On December 31, the Cornerstone Company reported the following information on its financial statements. \[\begin{array} { l r } \text { Total current assets } & \$ 1,020,000 \\ \text { Total long-ter m assets } & \$ 2,775,000 \\ \text { Total cur rent liabilities } & \$ 735,000 \\ \text { Total long-term debt } & \$ 1,462,500 \end{array}\] According to this information, the company's current ratio is approximately

A) 0.72. B) 1.39. C) 1.73. D) 1.90. A) 0.72. B) 1.39. C) 1.73. D) 1.90.

A) preferred by investors is equal to 2.0 or higher. B) compares the price/earnings ratio to the rate of growth of the company's earnings. C) is a measure of a firm's liquidity. D) measures the ability of a firm's assets to generate growth for the firm. A) preferred by investors is equal to 2.0 or higher. B) compares the price/earnings ratio to the rate of growth of the company's earnings. C) is a measure of a firm's liquidity. D) measures the ability of a firm's assets to generate growth for the firm.

Exam 7: Analyzing Common Stocks

On December 31, the Cornerstone Company reported the following information on its financial statements. Total current assets \ 1,020,000 Total long-ter m assets \ 2,775,000 Total cur rent liabilities \ 735,000 Total long-term debt \ 1,462,500 According to this information, the company's current ratio is approximately

(Multiple Choice)

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Question 21

Which one of the following is likely to have a negative effect on stock prices?

(Multiple Choice)

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Question 22

A high P/E ratio may be an indication that a stock is overpriced.

(True/False)

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Question 23

Developing a general economic outlook assists in the identification of industries and firms that might be good investment opportunities.

(True/False)

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Question 24

The purpose of economic analysis is to gain an insight into the underlying health or vitality of the economy and to formulate expectations about future security prices.

(True/False)

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Question 25

Economic analysis would consider such factors as

(Multiple Choice)

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Question 26

The normal sequence in performing top down analysis is

(Multiple Choice)

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Question 27

EBITDA stands for earnings before inflation, taxes, depreciation, and amortization.

(True/False)

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Question 28

Federal budget deficits tend to further depress an already depressed economy.

(True/False)

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Question 29

The PEG ratio

(Multiple Choice)

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Question 30

To predict the demand for an industrial sector, it is essential to understand the economic forces that affect the industry.

(True/False)

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Question 31

The inventory turnover rate for a firm is 14.5 as compared to the relevant industry rate of 13.2. In this case, the firm is

(Multiple Choice)

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Question 32

A profitable firm with a very low debt-equity ratio might be able to increase return on equity by taking on additional debt.

(True/False)

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Question 33

Which of the following tends to signal that stock prices are likely to rise in the future? I. Employment increases after several months of recession. II. Interest rates are low compared to the recent past. III. Major market indexes have just reached record highs. IV. Housing starts increase after several months of decline.

(Multiple Choice)

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Question 34

The debt to equity ratio should be approximately the same across all industrial sectors.

(True/False)

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Question 35

A company has sales of $640,000, net profit after taxes of $23,000, and a total asset turnover of 2.5. What is the return on assets?

(Multiple Choice)

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Question 36

Products such as laundry detergent and toothpaste are locked in the mature growth stage.

(True/False)

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Question 37

The top down approach to security analysis starts with top management and then examines production and marketing strategies.

(True/False)

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Question 38

Well managed companies rarely reach the decline stage because

(Multiple Choice)

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Question 39

The quick ratio differs from the current current ratio in that accounts receivable are excluded from current assets.

(True/False)

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Question 40

Showing 21 - 40 of 128

Which one of the following is likely to have a negative effect on stock prices?

A high P/E ratio may be an indication that a stock is overpriced.

Developing a general economic outlook assists in the identification of industries and firms that might be good investment opportunities.

The purpose of economic analysis is to gain an insight into the underlying health or vitality of the economy and to formulate expectations about future security prices.

Economic analysis would consider such factors as

The normal sequence in performing top down analysis is

EBITDA stands for earnings before inflation, taxes, depreciation, and amortization.

Federal budget deficits tend to further depress an already depressed economy.

The PEG ratio

To predict the demand for an industrial sector, it is essential to understand the economic forces that affect the industry.

The inventory turnover rate for a firm is 14.5 as compared to the relevant industry rate of 13.2. In this case, the firm is

A profitable firm with a very low debt-equity ratio might be able to increase return on equity by taking on additional debt.

The debt to equity ratio should be approximately the same across all industrial sectors.

A company has sales of $640,000, net profit after taxes of $23,000, and a total asset turnover of 2.5. What is the return on assets?

Products such as laundry detergent and toothpaste are locked in the mature growth stage.

The top down approach to security analysis starts with top management and then examines production and marketing strategies.

Well managed companies rarely reach the decline stage because

The quick ratio differs from the current current ratio in that accounts receivable are excluded from current assets.

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