Question 1

If a firm is using financial leverage successfully, the ROE should be

Accepted Answer

A)  higher than the profit margin 
B)  higher than ROA 
C)  higher than if no leverage were used 
D)  lower than if no leverage were used 
A)  higher than the profit margin 
B)  higher than ROA 
C)  higher than if no leverage were used 
D)  lower than if no leverage were used C

Question 2

A subprime FICO score is

Accepted Answer

A)  562 
B)  613 
C)  701 
D)  800 
A)  562 
B)  613 
C)  701 
D)  800 A

Question 3

The dividend payout ratio shows

Accepted Answer

A)  EPS 
B)  the percentage of net income paid to shareholders 
C)  the percentage of income paid to shareholders 
D)  the ratio of dividends paid to shareholder's equity 
A)  EPS 
B)  the percentage of net income paid to shareholders 
C)  the percentage of income paid to shareholders 
D)  the ratio of dividends paid to shareholder's equity B

Question 4

The difference between current assets and current liabilities is

Accepted Answer

A)  current ratio 
B)  retained earnings 
C)  net income 
D)  net working capital 
A)  current ratio 
B)  retained earnings 
C)  net income 
D)  net working capital

Question 5

Times interest earned is a measure of the

Accepted Answer

A)  operational earnings of the firm (EBIT) compared to annual interest payments 
B)  net earnings after taxes compared annual interest payments 
C)  net earnings before taxes compared to annual interest payments 
D)  gross profit compared to annual interest payments 
A)  operational earnings of the firm (EBIT) compared to annual interest payments 
B)  net earnings after taxes compared annual interest payments 
C)  net earnings before taxes compared to annual interest payments 
D)  gross profit compared to annual interest payments

Question 6

Efficiency ratios measure how well a firm is using its

Accepted Answer

A)  financial capital 
B)  personnel 
C)  assets and liabilities 
D)  financial leverage 
A)  financial capital 
B)  personnel 
C)  assets and liabilities 
D)  financial leverage

Question 7

How is the ROE related to the ROA?

Accepted Answer

A)  multiply ROE by the leverage ratio (equity/assets) to find ROA 
B)  multiply ROA by the leverage ratio to find ROA 
C)  the rate of ROE is higher than ROA 
D)  the rate of ROA is higher than ROE 
A)  multiply ROE by the leverage ratio (equity/assets) to find ROA 
B)  multiply ROA by the leverage ratio to find ROA 
C)  the rate of ROE is higher than ROA 
D)  the rate of ROA is higher than ROE

Question 8

The average collection period concerns

Accepted Answer

A)  accounts receivable 
B)  accounts payable 
C)  current assets 
D)  cash discounts on credit sales 
A)  accounts receivable 
B)  accounts payable 
C)  current assets 
D)  cash discounts on credit sales

Question 9

A junk bond rating is

Accepted Answer

A)  BAA 
B)  BBB 
C)  BB 
D)  none of the above 
A)  BAA 
B)  BBB 
C)  BB 
D)  none of the above

Question 10

The common-size income statement expresses all items listed on the income statement as a percentage of assets

Accepted Answer

A)  equity 
B)  sales 
C)  net income 
D)  Cost of goods sold 
A)  equity 
B)  sales 
C)  net income 
D)  Cost of goods sold

Question 11

Net income of a firm divided by the revenue (net sales) gives the

Accepted Answer

A)  ROA 
B)  ROE 
C)  EPS 
D)  Profit margin 
A)  ROA 
B)  ROE 
C)  EPS 
D)  Profit margin

If a firm is using financial leverage successfully, the ROE should be

A subprime FICO score is

The dividend payout ratio shows

The difference between current assets and current liabilities is

Times interest earned is a measure of the

Efficiency ratios measure how well a firm is using its

How is the ROE related to the ROA?

The average collection period concerns

A junk bond rating is

The common-size income statement expresses all items listed on the income statement as a percentage of assets

Net income of a firm divided by the revenue (net sales) gives the

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

An Overview of Assetliability Management Alm

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Commercial and Industrial Lending

Real Estate and Consumer Lending

Liquidity Management

Capital Management

Managing Liabilities

Off-Balance Sheet Activities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters

Exam 8: Credit Evaluation Process

If a firm is using financial leverage successfully, the ROE should be

A subprime FICO score is

The dividend payout ratio shows

The difference between current assets and current liabilities is

Times interest earned is a measure of the

Efficiency ratios measure how well a firm is using its

How is the ROE related to the ROA?

The average collection period concerns

A junk bond rating is

The common-size income statement expresses all items listed on the income statement as a percentage of assets

Net income of a firm divided by the revenue (net sales) gives the

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

An Overview of Assetliability Management Alm

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Commercial and Industrial Lending

Real Estate and Consumer Lending

Liquidity Management

Capital Management

Managing Liabilities

Off-Balance Sheet Activities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters