Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Following is financial statement information for Rogex Corporation: cash = $242; accounts receivable = $850; inventory = $820; net fixed assets = $3,408; accounts payable = $700; short-term notes payable = $740; long-term liabilities = $1,100; common stock = $1,160; and retained earnings = $1,620. What is the debt-to-equity ratio for Rogex?

Accepted Answer

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

Question 3

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 its NOPAT margin?

Accepted Answer

A) 11.86% 
B) 21.43% 
C) 26.57% 
D) 29.14% 
A) 11.86% 
B) 21.43% 
C) 26.57% 
D) 29.14%

Question 4

Following is financial statement information for Rogex Corporation: cash = $242; accounts receivable = $850; inventory = $820; net fixed assets = $3,408; accounts payable = $700; short-term notes payable = $740; long-term liabilities = $1,100; common stock = $1,160; and retained earnings = $1,620. The total-debt-to-total-assets ratio for Rogex is:

Accepted Answer

A) 0.48 
B) 0.71 
C) 0.27 
D) 0.53 
A) 0.48 
B) 0.71 
C) 0.27 
D) 0.53

Question 5

The term "cash build" is measured as:

Accepted Answer

A) net income plus depreciation 
B) net sales minus expenses minus (plus)an increase (decrease)in inventories 
C) net sales minus (plus)an increase (decrease)in receivables 
D) net income plus depreciation minus (plus)an increase (decrease)in payables 
A) net income plus depreciation 
B) net sales minus expenses minus (plus)an increase (decrease)in inventories 
C) net sales minus (plus)an increase (decrease)in receivables 
D) net income plus depreciation minus (plus)an increase (decrease)in payables

Question 6

A venture has net sales of $400,000, cost of goods sold of $200,000, operating expenses (selling, general, and administrative)of $100,000, and interest expenses of $50,000. What is the operating profit margin?

Accepted Answer

A) 50% 
B) 75% 
C) 25% 
D) 40% 
A) 50% 
B) 75% 
C) 25% 
D) 40%

Question 7

Cash burn is the cash a venture expends on its operating, financing, and depreciation expenses.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Total debt includes current liabilities, long-term debt, and retained earnings.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an efficiency and return measure?

Accepted Answer

A) sales-to-total-assets ratio 
B) return on equity 
C) return on assets 
D) inventory-to-total-assets ratio 
A) sales-to-total-assets ratio 
B) return on equity 
C) return on assets 
D) inventory-to-total-assets ratio

Question 11

Following is financial statement information for Rogex Corporation: cash = $242; accounts receivable = $850; inventory = $820; net fixed assets = $3,408; accounts payable = $700; short-term notes payable = $740; long-term liabilities = $1,100; common stock = $1,160; retained earnings = $1,620; net sales = $2,768; cost of goods sold = $1,210; depreciation = $360; interest expense = $160; taxes = $312; addition to retained earnings = $508; and dividends paid = $218. What is the return on equity for Rogex?

Accepted Answer

A) 26.1% 
B) 44.7% 
C) 62.6% 
D) 18.4% 
A) 26.1% 
B) 44.7% 
C) 62.6% 
D) 18.4%

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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?

Accepted Answer

A) fixed-charges coverage 
B) debt-to-equity ratio 
C) equity multiplier 
D) interest coverage 
A) fixed-charges coverage 
B) debt-to-equity ratio 
C) equity multiplier 
D) interest coverage

Question 14

Financial ratios show the relationships between two or more financial variables or between financial variables and time.

Accepted Answer

A) True 
 B)False

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

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 its NOPAT margin?

The term "cash build" is measured as:

A venture has net sales of $400,000, cost of goods sold of $200,000, operating expenses (selling, general, and administrative)of $100,000, and interest expenses of $50,000. What is the operating profit margin?

Cash burn is the cash a venture expends on its operating, financing, and depreciation expenses.

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

Total debt includes current liabilities, long-term debt, and retained earnings.

Which of the following is not an efficiency and return measure?

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

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?

Financial ratios show the relationships between two or more financial variables or between financial variables and time.

Introduction to Finance for Entrepreneurs

Developing the Business Idea

Organizing and Financing a New Venture

Preparing and Using Financial Statements

Managing Cash Flow

Types and Costs of Financial Capital

Securities Law Considerations When Obtaining Venture Financing

Projecting Financial Statements

Valuing Early Stage Ventures

Venture Capital Valuation Methods

Professional Venture Capital

Other Financing Alternatives

Security Structures and Determining Enterprise Values

Harvesting the Business Venture Investment

Financially Troubled Ventures Turnaround Opportunities

Filters

Exam 5: Evaluating Operating and Financial Performance

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

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 its NOPAT margin?

The term "cash build" is measured as:

A venture has net sales of $400,000, cost of goods sold of $200,000, operating expenses (selling, general, and administrative)of $100,000, and interest expenses of $50,000. What is the operating profit margin?

Cash burn is the cash a venture expends on its operating, financing, and depreciation expenses.

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

Total debt includes current liabilities, long-term debt, and retained earnings.

Which of the following is not an efficiency and return measure?

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

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?

Financial ratios show the relationships between two or more financial variables or between financial variables and time.

Introduction to Finance for Entrepreneurs

Developing the Business Idea

Organizing and Financing a New Venture

Preparing and Using Financial Statements

Managing Cash Flow

Types and Costs of Financial Capital

Securities Law Considerations When Obtaining Venture Financing

Projecting Financial Statements

Valuing Early Stage Ventures

Venture Capital Valuation Methods

Professional Venture Capital

Other Financing Alternatives

Security Structures and Determining Enterprise Values

Harvesting the Business Venture Investment

Financially Troubled Ventures Turnaround Opportunities

Filters