Question 1

What is the cash coverage ratio for 2015?

Accepted Answer

A)  5.2 
B)  6.8 
C)  8.7 
D)  9.7 
E)  9.2 
A)  5.2 
B)  6.8 
C)  8.7 
D)  9.7 
E)  9.2

Question 2

Using the Du Pont Identity Method, calculate return on equity given the following information. Proﬁt margin 18%; total asset turnover 0.70; equity multiplier 1.1.

Accepted Answer

A)  12.16% 
B)  13.86% 
C)  14.16% 
D)  15.86% 
E)  16.16% 
A)  12.16% 
B)  13.86% 
C)  14.16% 
D)  15.86% 
E)  16.16%

Question 3

What is the quick ratio for Young for 2014?

Accepted Answer

A)  0.57 
B)  0.63 
C)  0.76 
D)  1.13 
E)  1.33 
A)  0.57 
B)  0.63 
C)  0.76 
D)  1.13 
E)  1.33

Question 4

Calculate the value of total assets given the following information: total debt ratio = 0.55; total equity = $7,700.

Accepted Answer

A)  $11,000 
B)  $17,111 
C)  $33,000 
D)  $44,000 
E)  $55,000 
A)  $11,000 
B)  $17,111 
C)  $33,000 
D)  $44,000 
E)  $55,000

Question 5

Calculate the times interest earned ratio given the following information: depreciation expense = $30,000; EBIT = $180,000; cash coverage ratio = 14 times.

Accepted Answer

A)  8.0 times 
B)  7.5 times 
C)  11.5 times 
D)  12.0 times 
E)  12.5 times 
A)  8.0 times 
B)  7.5 times 
C)  11.5 times 
D)  12.0 times 
E)  12.5 times

Question 6

Based on the information provided above, what was the ﬁrm's tax rate in 2015?

Accepted Answer

A)  23.91% 
B)  28.21% 
C)  39.29% 
D)  15.19% 
E)  23.86 
A)  23.91% 
B)  28.21% 
C)  39.29% 
D)  15.19% 
E)  23.86

Question 7

What is the market-to-book ratio if the Smith Co. has 2,603 million shares of common stock outstanding with a current market price of $22 per share?

Accepted Answer

A)  2.67 
B)  3.33 
C)  3.63 
D)  4.37 
E)  6.06 
A)  2.67 
B)  3.33 
C)  3.63 
D)  4.37 
E)  6.06

Question 8

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 9

Sing Lee's has accounts payable of $300, inventory of $250, cash of $50, ﬁxed assets of $500, accounts receivable of $200, and long-term debt of $400. What is the value of the net working
Capital to total assets ratio?

Accepted Answer

A)  .20 
B)  .33 
C)  .40 
D)  .50 
E)  .67 
A)  .20 
B)  .33 
C)  .40 
D)  .50 
E)  .67

Question 10

The sources of cash include ($ in millions):

Accepted Answer

A)  $220 from accounts payable and $840 from ﬁxed assets. 
B)  $840 from ﬁxed assets and $70 from accounts receivable. 
C)  $70 from accounts receivable and $1,540 from common stock. 
D)  $1,540 from common stock and $220 from accounts payable. 
E)  $2,125 from long term debt and $1,540 from common stock. 
A)  $220 from accounts payable and $840 from ﬁxed assets. 
B)  $840 from ﬁxed assets and $70 from accounts receivable. 
C)  $70 from accounts receivable and $1,540 from common stock. 
D)  $1,540 from common stock and $220 from accounts payable. 
E)  $2,125 from long term debt and $1,540 from common stock.

Question 11

A ﬁxed asset turnover ratio of .72 means that:

Accepted Answer

A)  For every $1 in total assets, a ﬁrm can generate $0.72 in net income. 
B)  For every $1 in net ﬁxed assets, a ﬁrm can generate $0.72 in net income. 
C)  For every $1 in total assets, a ﬁrm can generate $0.72 in sales. 
D)  For every $1 in net ﬁxed assets, a ﬁrm can generate $0.72 in sales. 
E)  For every $1 in net ﬁxed assets, a ﬁrm can obtain $0.72 in debt. 
A)  For every $1 in total assets, a ﬁrm can generate $0.72 in net income. 
B)  For every $1 in net ﬁxed assets, a ﬁrm can generate $0.72 in net income. 
C)  For every $1 in total assets, a ﬁrm can generate $0.72 in sales. 
D)  For every $1 in net ﬁxed assets, a ﬁrm can generate $0.72 in sales. 
E)  For every $1 in net ﬁxed assets, a ﬁrm can obtain $0.72 in debt.

Question 12

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 13

The ﬁnancial ratio measured as net income divided by total equity is known as the ﬁrm's:

Accepted Answer

A)  Proﬁt margin. 
B)  Return on assets. 
C)  Return on equity. 
D)  Asset turnover. 
E)  Earnings before interest and taxes (EBIT). 
A)  Proﬁt margin. 
B)  Return on assets. 
C)  Return on equity. 
D)  Asset turnover. 
E)  Earnings before interest and taxes (EBIT).

Question 14

An equity multiplier of 1.64 means that for every $1 the ﬁrm raises in new equity, the ﬁrm can:

Accepted Answer

A)  Acquire an additional $1.64 in new assets. 
B)  Acquire an additional $1.64 in new debt. 
C)  Earn $1.64 in additional proﬁts. 
D)  Earn $1.64 in additional proﬁts per share. 
E)  Pay $1.64 in additional dividends per share. 
A)  Acquire an additional $1.64 in new assets. 
B)  Acquire an additional $1.64 in new debt. 
C)  Earn $1.64 in additional proﬁts. 
D)  Earn $1.64 in additional proﬁts per share. 
E)  Pay $1.64 in additional dividends per share.

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

If a ﬁrm produces a 10 % return on assets and also a 10 % return on equity, then the ﬁrm:

Accepted Answer

A)  Has no debt of any kind. 
B)  Is using its assets as eﬃciently as possible. 
C)  Has no net working capital. 
D)  Also has a current ratio of 10. 
E)  Has an equity multiplier of 2. 
A)  Has no debt of any kind. 
B)  Is using its assets as eﬃciently as possible. 
C)  Has no net working capital. 
D)  Also has a current ratio of 10. 
E)  Has an equity multiplier of 2.

Question 17

The equity multiplier ratio is measured as:

Accepted Answer

A)  Total equity divided by total assets. 
B)  Total equity plus total debt. 
C)  Total assets minus total equity, divided by total assets. 
D)  Total assets plus total equity, divided by total debt. 
E)  Total assets divided by total equity. 
A)  Total equity divided by total assets. 
B)  Total equity plus total debt. 
C)  Total assets minus total equity, divided by total assets. 
D)  Total assets plus total equity, divided by total debt. 
E)  Total assets divided by total equity.

Question 18

If a ﬁrm uses part of the cash it received from payment of an account receivable to buy inventory
and leaves the rest in its bank account, its current ratio will remain unchanged.

Accepted Answer

A) True 
 B)False

Question 19

Calculate the current ratio given the following information: cash = $4,000; total current assets = $21,000; cash ratio = 0.40.

Accepted Answer

A)  2.09 
B)  2.10 
C)  2.11 
D)  2.12 
E)  2.13 
A)  2.09 
B)  2.10 
C)  2.11 
D)  2.12 
E)  2.13

Question 20

Last year, New Flying Industries had a price-earnings ratio of 15. This year, the price earnings ratio is 18. Based on this information, it can be stated with certainty that:

Accepted Answer

A)  The price per share increased. 
B)  The earnings per share decreased. 
C)  Investors are paying a higher price for each share of stock purchased. 
D)  Investors are receiving a higher rate of return this year. 
E)  Either theprice per share, the earnings per share, or both changed. 
A)  The price per share increased. 
B)  The earnings per share decreased. 
C)  Investors are paying a higher price for each share of stock purchased. 
D)  Investors are receiving a higher rate of return this year. 
E)  Either theprice per share, the earnings per share, or both changed.

Exam 3: Working With Financial Statements

What is the cash coverage ratio for 2015?

Using the Du Pont Identity Method, calculate return on equity given the following information. Proﬁt margin 18%; total asset turnover 0.70; equity multiplier 1.1.

What is the quick ratio for Young for 2014?

Calculate the value of total assets given the following information: total debt ratio = 0.55; total equity = $7,700.

Calculate the times interest earned ratio given the following information: depreciation expense = $30,000; EBIT = $180,000; cash coverage ratio = 14 times.

Based on the information provided above, what was the ﬁrm's tax rate in 2015?

What is the market-to-book ratio if the Smith Co. has 2,603 million shares of common stock outstanding with a current market price of $22 per share?

Sing Lee's has accounts payable of $300, inventory of $250, cash of $50, ﬁxed assets of $500, accounts receivable of $200, and long-term debt of $400. What is the value of the net working Capital to total assets ratio?

The sources of cash include ($ in millions):

A ﬁxed asset turnover ratio of .72 means that:

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 ﬁnancial ratio measured as net income divided by total equity is known as the ﬁrm's:

An equity multiplier of 1.64 means that for every $1 the ﬁrm raises in new equity, the ﬁrm can:

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

If a ﬁrm produces a 10 % return on assets and also a 10 % return on equity, then the ﬁrm:

The equity multiplier ratio is measured as:

If a ﬁrm uses part of the cash it received from payment of an account receivable to buy inventory and leaves the rest in its bank account, its current ratio will remain unchanged.

Calculate the current ratio given the following information: cash = $4,000; total current assets = $21,000; cash ratio = 0.40.

Last year, New Flying Industries had a price-earnings ratio of 15. This year, the price earnings ratio is 18. Based on this information, it can be stated with certainty that:

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