Question 1

Puffy's Pastries generates ﬁve cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5 %.

Accepted Answer

A)  return on assets 
B)  return on equity 
C)  proﬁt margin 
D)  Du Pont measure 
E)  total asset turnover 
A)  return on assets 
B)  return on equity 
C)  proﬁt margin 
D)  Du Pont measure 
E)  total asset turnover

Question 2

Which of the following is not a liquidity ratio?

Accepted Answer

A)  Interval measure. 
B)  Current ratio. 
C)  Quick ratio. 
D)  Net working capital to total assets. 
E)  Current asset ampliﬁer. 
A)  Interval measure. 
B)  Current ratio. 
C)  Quick ratio. 
D)  Net working capital to total assets. 
E)  Current asset ampliﬁer.

Question 3

If the ﬁrm is currently carrying a price/earnings ratio of 2, what is the ﬁrm's approximate market price per share?

Accepted Answer

A)  $8 
B)  $11 
C)  $56 
D)  $78 
E)  $129 
A)  $8 
B)  $11 
C)  $56 
D)  $78 
E)  $129

Question 4

Given the following information, calculate sales value. Total asset turnover 0.80; total liabilities $5,000; total equity $5,000.

Accepted Answer

A)  $8,600 
B)  $8,000 
C)  $10,600 
D)  $11,600 
E)  $12,600 
A)  $8,600 
B)  $8,000 
C)  $10,600 
D)  $11,600 
E)  $12,600

Question 5

The net change in cash over a period of time is equal to:

Accepted Answer

A)  Cash uses plus operating cash ﬂows. 
B)  Additions to current assets minus expenditures on ﬁxed assets. 
C)  Net income plus depreciation, minus taxes and dividends. 
D)  Ending cash minus changes in long-term debt minus additions to ﬁxed assets. 
E)  Cash ﬂow from operating activities plus net cash from investment and ﬁnancing activities. 
A)  Cash uses plus operating cash ﬂows. 
B)  Additions to current assets minus expenditures on ﬁxed assets. 
C)  Net income plus depreciation, minus taxes and dividends. 
D)  Ending cash minus changes in long-term debt minus additions to ﬁxed assets. 
E)  Cash ﬂow from operating activities plus net cash from investment and ﬁnancing activities.

Question 6

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 7

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 8

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

Accepted Answer

A)  $2.72 
B)  $3.40 
C)  $5.28 
D)  $6.60 
E)  $10.00 
A)  $2.72 
B)  $3.40 
C)  $5.28 
D)  $6.60 
E)  $10.00

Question 9

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

Accepted Answer

A)  7.78 
B)  8.52 
C)  8.95 
D)  9.95 
E)  10.12 
A)  7.78 
B)  8.52 
C)  8.95 
D)  9.95 
E)  10.12

Question 10

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words,
What do these ratios tell us?

Accepted Answer

A)  The number of days it takes before the current ratio falls to zero. 
B)  The number of days of sales needed to make a proﬁt. 
C)  The time it takes to completely replace total current assets. 
D)  The rate at which assets are replaced. 
E)  How long it takes, on average, to entirely deplete these accounts. 
A)  The number of days it takes before the current ratio falls to zero. 
B)  The number of days of sales needed to make a proﬁt. 
C)  The time it takes to completely replace total current assets. 
D)  The rate at which assets are replaced. 
E)  How long it takes, on average, to entirely deplete these accounts.

Question 11

The Furniture Barn has a proﬁt margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

Accepted Answer

A)  17.14 % 
B)  19.87 % 
C)  20.67 % 
D)  21.69 % 
E)  24.08 % 
A)  17.14 % 
B)  19.87 % 
C)  20.67 % 
D)  21.69 % 
E)  24.08 %

Question 12

Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%.

Accepted Answer

A)  1.30 
B)  1.35 
C)  1.40 
D)  1.45 
E)  1.50 
A)  1.30 
B)  1.35 
C)  1.40 
D)  1.45 
E)  1.50

Question 13

Which one of the following is true concerning the market-to-book ratio?

Accepted Answer

A)  Extending the depreciation life of a ﬁrm's assets will increase the market-to-book ratio. 
B)  A decrease in the price of the stock on the stock exchange will increase the market-to- book ratio. 
C)  An increase in the market value of the common stock will increase the market-to-book ratio. 
D)  The market-to-book ratio is of most interest to the creditors of a ﬁrm. 
E)  The market-to-book ratio provides the selling price of a ﬁrm's inventory. 
A)  Extending the depreciation life of a ﬁrm's assets will increase the market-to-book ratio. 
B)  A decrease in the price of the stock on the stock exchange will increase the market-to- book ratio. 
C)  An increase in the market value of the common stock will increase the market-to-book ratio. 
D)  The market-to-book ratio is of most interest to the creditors of a ﬁrm. 
E)  The market-to-book ratio provides the selling price of a ﬁrm's inventory.

Question 14

A statement that explains the changes in the cash balance of a ﬁrm over time is called a(n):

Accepted Answer

A)  Statement of ﬁnancial position. 
B)  Statement of comprehensive income. 
C)  Statement of current assets. 
D)  Statement of analysis. 
E)  Statement of cash ﬂows. 
A)  Statement of ﬁnancial position. 
B)  Statement of comprehensive income. 
C)  Statement of current assets. 
D)  Statement of analysis. 
E)  Statement of cash ﬂows.

Puffy's Pastries generates ﬁve cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5 %.

Which of the following is not a liquidity ratio?

If the ﬁrm is currently carrying a price/earnings ratio of 2, what is the ﬁrm's approximate market price per share?

Given the following information, calculate sales value. Total asset turnover 0.80; total liabilities $5,000; total equity $5,000.

The net change in cash over a period of time is equal to:

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.

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

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words, What do these ratios tell us?

The Furniture Barn has a proﬁt margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%.

Which one of the following is true concerning the market-to-book ratio?

A statement that explains the changes in the cash balance of a ﬁrm over time is called a(n):

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Long-Term Financial Planning and 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

Some 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 Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Filters

Exam 3: Working With Financial Statements

Puffy's Pastries generates ﬁve cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5 %.

Which of the following is not a liquidity ratio?

If the ﬁrm is currently carrying a price/earnings ratio of 2, what is the ﬁrm's approximate market price per share?

Given the following information, calculate sales value. Total asset turnover 0.80; total liabilities $5,000; total equity $5,000.

The net change in cash over a period of time is equal to:

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.

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

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share?

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

In addition to days' sales in receivables and days' sales in inventory we could calculate "days' sales in payables" by computing the accounts payable turnover and dividing it into 365 days. In words, What do these ratios tell us?

The Furniture Barn has a proﬁt margin of 8.7 %, a return on assets of 11.6 %, and an equity multiplier of 1.87. What is the return on equity?

Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%.

Which one of the following is true concerning the market-to-book ratio?

A statement that explains the changes in the cash balance of a ﬁrm over time is called a(n):

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Long-Term Financial Planning and 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

Some 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 Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Filters