Question 1

The interval measure is an example of a(n)____________ ratio.

Accepted Answer

A)  Short-term solvency. 
B)  Financial leverage. 
C)  Asset management. 
D)  Proﬁtability. 
E)  Market value. 
A)  Short-term solvency. 
B)  Financial leverage. 
C)  Asset management. 
D)  Proﬁtability. 
E)  Market value.

Question 2

A __________ standardizes items on the statement of comprehensive income and statement of ﬁnancial position relative to a point in time.

Accepted Answer

A)  Statement of standardization. 
B)  Statement of changes in ﬁnancial position. 
C)  Common-base year statement. 
D)  Common-size statement. 
E)  Tax reconciliation statement. 
A)  Statement of standardization. 
B)  Statement of changes in ﬁnancial position. 
C)  Common-base year statement. 
D)  Common-size statement. 
E)  Tax reconciliation statement.

Question 3

When comparing the ﬁnancial statements of one ﬁrm with those of another ﬁrm, a problem that may
be encountered is that the ﬁrms may use differing accounting methods for inventory purposes.

Accepted Answer

A) True 
 B)False

Question 4

Nu Plastics has accounts receivable of $6,400, inventory of $11,600, cash of $1,300, accounts payable of $8,800, sales of $117,600, and cost of goods sold of $89,300. What is the net working
Capital turnover rate?

Accepted Answer

A)  6.09 
B)  7.21 
C)  7.60 
D)  10.87 
E)  11.20 
A)  6.09 
B)  7.21 
C)  7.60 
D)  10.87 
E)  11.20

Question 5

What is the total debt ratio for Young for 2015?

Accepted Answer

A)  0.27 
B)  0.48 
C)  0.53 
D)  0.70 
E)  0.82 
A)  0.27 
B)  0.48 
C)  0.53 
D)  0.70 
E)  0.82

Question 6

Without making reference to its formula, provide a deﬁnition of return on assets.

Accepted Answer

The ratio provides an indicati

Question 7

A very short-term creditor would likely be most interested in a ﬁrm's ________________.

Accepted Answer

A)  Current ratio 
B)  Quick ratio 
C)  NWC to total assets ratio 
D)  Cash ratio 
E)  Interval measure 
A)  Current ratio 
B)  Quick ratio 
C)  NWC to total assets ratio 
D)  Cash ratio 
E)  Interval measure

Question 8

An increase in a(n) _____________ account would be considered a(n) __________ of funds.

Accepted Answer

A)  Asset; source 
B)  Liability; source 
C)  Liabilities; use 
D)  Expense; source 
E)  Revenues; use 
A)  Asset; source 
B)  Liability; source 
C)  Liabilities; use 
D)  Expense; source 
E)  Revenues; use

Question 9

Cora Operation has an inventory turnover of 121 and a receivables turnover of 36. This means that it takes _____ days for the ﬁrm to sell its inventory and collect payment for that sale.

Accepted Answer

A)  2.32 
B)  4.29 
C)  11.86 
D)  13.16 
E)  14.09 
A)  2.32 
B)  4.29 
C)  11.86 
D)  13.16 
E)  14.09

Question 10

Common size statements can only be completed on the statement of comprehensive income and
statement of ﬁnancial position.

Accepted Answer

A) True 
 B)False

Question 11

Patti's Pizza has net income of $218,490, a price-earnings ratio of 14.6, and earnings per share of $1.32. How many shares of stock are outstanding?

Accepted Answer

A)  14,965 
B)  19,754 
C)  165,523 
D)  171,000 
E)  173,407 
A)  14,965 
B)  19,754 
C)  165,523 
D)  171,000 
E)  173,407

Question 12

What is the debt-equity ratio for 2014?

Accepted Answer

A)  0.48 
B)  0.91 
C)  1.12 
D)  2.15 
E)  2.32 
A)  0.48 
B)  0.91 
C)  1.12 
D)  2.15 
E)  2.32

Question 13

The function described as the proﬁt margin times the total asset turnover times the equity multiplier is known as the:

Accepted Answer

A)  Du Pont identity. 
B)  Return on assets. 
C)  Statement of cash ﬂows. 
D)  Asset turnover ratio. 
E)  Interval measure. 
A)  Du Pont identity. 
B)  Return on assets. 
C)  Statement of cash ﬂows. 
D)  Asset turnover ratio. 
E)  Interval measure.

Question 14

If a ﬁrm is having diﬃculty controlling its operating expenses, the trouble will be most directly reﬂected in the ﬁrm's ________________ ratios.

Accepted Answer

A)  liquidity 
B)  proﬁtability 
C)  market value 
D)  asset management 
E)  long-term solvency 
A)  liquidity 
B)  proﬁtability 
C)  market value 
D)  asset management 
E)  long-term solvency

Question 15

A ﬁrm has a total debt ratio of .47. This means that that ﬁrm has 47 cents in debt for every:

Accepted Answer

A)  $1.00 in equity. 
B)  $1.00 in total sales. 
C)  $1.00 in current assets. 
D)  $0.53 in equity. 
E)  $0.53 in total assets. 
A)  $1.00 in equity. 
B)  $1.00 in total sales. 
C)  $1.00 in current assets. 
D)  $0.53 in equity. 
E)  $0.53 in total assets.

Question 16

The quick ratio is measured as:

Accepted Answer

A)  Current assets divided by current liabilities. 
B)  Cash on hand plus current liabilities, divided by current assets. 
C)  Current liabilities divided by current assets, plus inventory. 
D)  Current assets minus inventory, divided by current liabilities. 
E)  Current assets minus inventory minus current liabilities. 
A)  Current assets divided by current liabilities. 
B)  Cash on hand plus current liabilities, divided by current assets. 
C)  Current liabilities divided by current assets, plus inventory. 
D)  Current assets minus inventory, divided by current liabilities. 
E)  Current assets minus inventory minus current liabilities.

Question 17

In words, what does an equity multiplier of 2 mean?

Accepted Answer

A)  Each dollar in assets the ﬁrm owns is supported by $2 in equity. 
B)  Each dollar in equity the ﬁrm has supports $2 in assets. 
C)  Each dollar in assets the ﬁrm owns is supported by $4 in equity. 
D)  Each dollar in equity the ﬁrm has supports ﬁfty cents in assets. 
E)  Each dollar in assets the ﬁrm owns is supported by $2 in debt. 
A)  Each dollar in assets the ﬁrm owns is supported by $2 in equity. 
B)  Each dollar in equity the ﬁrm has supports $2 in assets. 
C)  Each dollar in assets the ﬁrm owns is supported by $4 in equity. 
D)  Each dollar in equity the ﬁrm has supports ﬁfty cents in assets. 
E)  Each dollar in assets the ﬁrm owns is supported by $2 in debt.

Question 18

Calculate the value of short-term debt given the following information: total debt = $320,000; debt/equity ratio = 0.80; long-term debt ratio = 0.3750.

Accepted Answer

A)  $65,000 
B)  $70,000 
C)  $75,000 
D)  $80,000 
E)  $85,000 
A)  $65,000 
B)  $70,000 
C)  $75,000 
D)  $80,000 
E)  $85,000

Question 19

The following statement of ﬁnancial position and statement of comprehensive income should be used.       Woodburn, Inc. has a proﬁt margin of _____ %, a total asset turnover of _____, an equity multiplier
Of _____, and a return on equity of _____ %. (Use 2015 values.)

Accepted Answer

A)  16.97%; .93; .60; 9.48% 
B)  16.97%; 1.07; 1.68; 30.52% 
C)  18.89%; 1.21; 1.73; 39.56% 
D)  18.89%; 1.07; 1.68; 33.94% 
A)  16.97%; .93; .60; 9.48% 
B)  16.97%; 1.07; 1.68; 30.52% 
C)  18.89%; 1.21; 1.73; 39.56% 
D)  18.89%; 1.07; 1.68; 33.94%

Question 20

A source of cash can be deﬁned as any activity that:

Accepted Answer

A)  Increases the current assets of a ﬁrm. 
B)  Increases the cash reserves of a ﬁrm. 
C)  Involves accounts receivable or inventory. 
D)  Involves the sale or return of merchandise by a customer. 
E)  Involves the spending of cash. 
A)  Increases the current assets of a ﬁrm. 
B)  Increases the cash reserves of a ﬁrm. 
C)  Involves accounts receivable or inventory. 
D)  Involves the sale or return of merchandise by a customer. 
E)  Involves the spending of cash.

Exam 3: Working With Financial Statements

The interval measure is an example of a(n)____________ ratio.

A __________ standardizes items on the statement of comprehensive income and statement of ﬁnancial position relative to a point in time.

When comparing the ﬁnancial statements of one ﬁrm with those of another ﬁrm, a problem that may be encountered is that the ﬁrms may use differing accounting methods for inventory purposes.

Nu Plastics has accounts receivable of $6,400, inventory of $11,600, cash of $1,300, accounts payable of $8,800, sales of $117,600, and cost of goods sold of $89,300. What is the net working Capital turnover rate?

What is the total debt ratio for Young for 2015?

Without making reference to its formula, provide a deﬁnition of return on assets.

A very short-term creditor would likely be most interested in a ﬁrm's ________________.

An increase in a(n) _____________ account would be considered a(n) __________ of funds.

Cora Operation has an inventory turnover of 121 and a receivables turnover of 36. This means that it takes _____ days for the ﬁrm to sell its inventory and collect payment for that sale.

Common size statements can only be completed on the statement of comprehensive income and statement of ﬁnancial position.

Patti's Pizza has net income of $218,490, a price-earnings ratio of 14.6, and earnings per share of $1.32. How many shares of stock are outstanding?

What is the debt-equity ratio for 2014?

The function described as the proﬁt margin times the total asset turnover times the equity multiplier is known as the:

If a ﬁrm is having diﬃculty controlling its operating expenses, the trouble will be most directly reﬂected in the ﬁrm's ________________ ratios.

A ﬁrm has a total debt ratio of .47. This means that that ﬁrm has 47 cents in debt for every:

The quick ratio is measured as:

In words, what does an equity multiplier of 2 mean?

Calculate the value of short-term debt given the following information: total debt = $320,000; debt/equity ratio = 0.80; long-term debt ratio = 0.3750.

The following statement of ﬁnancial position and statement of comprehensive income should be used. Woodburn, Inc. has a proﬁt margin of _____ %, a total asset turnover of _____, an equity multiplier Of _____, and a return on equity of _____ %. (Use 2015 values.)

A source of cash can be deﬁned as any activity 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

An increase in a(n) ___ account would be considered a(n) of funds.

The following statement of ﬁnancial position and statement of comprehensive income should be used. Woodburn, Inc. has a proﬁt margin of ___ %, a total asset turnover of _, an equity multiplier Of _, and a return on equity of ___ %. (Use 2015 values.)