Question 1

What is the equity multiplier for 2011?

Accepted Answer

A)  1.21 
B)  1.36 
C)  1.44 
D)  1.82 
E)  1.91 
A)  1.21 
B)  1.36 
C)  1.44 
D)  1.82 
E)  1.91

Question 2

Which of the following are liquidity ratios?
I. cash coverage ratio
II. current ratio
III. quick ratio
IV. inventory turnover

Accepted Answer

A)  II and III only 
B)  I and II only 
C)  II, III, and IV only 
D)  I, III, and IV only 
E)  I, II, III, and IV 
A)  II and III only 
B)  I and II only 
C)  II, III, and IV only 
D)  I, III, and IV only 
E)  I, II, III, and IV

Question 3

Turner's Inc. has a price-earnings ratio of 16. Alfred's Co. has a price-earnings ratio of 19. Thus,you can state with certainty that one share of stock in Alfred's:

Accepted Answer

A)  has a higher market price than one share of stock in Turner's. 
B)  has a higher market price per dollar of earnings than does one share of Turner's. 
C)  sells at a lower price per share than one share of Turner's. 
D)  represents a larger percentage of firm ownership than does one share of Turner's stock. 
E)  earns a greater profit per share than does one share of Turner's stock. 
A)  has a higher market price than one share of stock in Turner's. 
B)  has a higher market price per dollar of earnings than does one share of Turner's. 
C)  sells at a lower price per share than one share of Turner's. 
D)  represents a larger percentage of firm ownership than does one share of Turner's stock. 
E)  earns a greater profit per share than does one share of Turner's stock.

Question 4

The financial ratio measured as the price per share of stock divided by earnings per share is known as the:

Accepted Answer

A)  return on assets. 
B)  return on equity. 
C)  debt-equity ratio. 
D)  price-earnings ratio. 
E)  Du Pont identity. 
A)  return on assets. 
B)  return on equity. 
C)  debt-equity ratio. 
D)  price-earnings ratio. 
E)  Du Pont identity.

Question 5

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 in equity. 
B)  $1 in total sales. 
C)  $1 in current assets. 
D)  $.53 in equity. 
E)  $.53 in total assets. 
A)  $1 in equity. 
B)  $1 in total sales. 
C)  $1 in current assets. 
D)  $.53 in equity. 
E)  $.53 in total assets.

Question 6

What is the quick ratio for 2011?

Accepted Answer

A)  .82 
B)  .95 
C)  1.36 
D)  2.18 
E)  2.28 
A)  .82 
B)  .95 
C)  1.36 
D)  2.18 
E)  2.28

Question 7

Catherine's Consulting has a net income of $1,400 and a total equity of $12,000. The debt-equity ratio is 1.0 and the plowback is 30%. What is the internal growth rate for Catherine's consulting?

Accepted Answer

A)  1.6% 
B)  1.78% 
C)  1.98% 
D)  2.21% 
E)  None of these. 
A)  1.6% 
B)  1.78% 
C)  1.98% 
D)  2.21% 
E)  None of these.

Question 8

The sustainable growth rate will be equivalent to the internal growth rate when:

Accepted Answer

A)  a firm has no debt. 
B)  the growth rate is positive. 
C)  the plowback ratio is positive but less than 1. 
D)  a firm has a debt-equity ratio exactly equal to 1. 
E)  net income is greater than zero. 
A)  a firm has no debt. 
B)  the growth rate is positive. 
C)  the plowback ratio is positive but less than 1. 
D)  a firm has a debt-equity ratio exactly equal to 1. 
E)  net income is greater than zero.

Question 9

Jupiter Explorers has $6,400 in sales. The profit margin is 4%. There are 6,400 shares of stock outstanding. The market price per share is $1.20. What is the price-earnings ratio?

Accepted Answer

A)  13 
B)  14 
C)  21 
D)  30 
E)  48 
A)  13 
B)  14 
C)  21 
D)  30 
E)  48

Question 10

The long-term debt ratio is probably of most interest to a firm's:

Accepted Answer

A)  credit customers. 
B)  employees. 
C)  suppliers. 
D)  mortgage holder. 
E)  shareholders. 
A)  credit customers. 
B)  employees. 
C)  suppliers. 
D)  mortgage holder. 
E)  shareholders.

Question 11

Rosita's Resources paid $250 in interest and $130 in dividends last year. The times interest earned ratio is 3.8 and the depreciation expense is $80. What is the value of the cash coverage ratio?

Accepted Answer

A)  2.71 
B)  3.64 
C)  4.12 
D)  5.78 
E)  6.10 
A)  2.71 
B)  3.64 
C)  4.12 
D)  5.78 
E)  6.10

Question 12

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 13

Ratios that measure a firm's financial leverage are known as ________ ratios.

Accepted Answer

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

Question 14

On a common-size balance sheet,all _______ accounts are shown as a percentage of _______.

Accepted Answer

A)  income; total assets 
B)  liability; net income 
C)  asset; sales 
D)  liability; total assets 
E)  equity; sales 
A)  income; total assets 
B)  liability; net income 
C)  asset; sales 
D)  liability; total assets 
E)  equity; sales

Question 15

Samuelson's has a debt-equity ratio of 40%,sales of $8,000,net income of $600,and total debt of $2,400. What is the return on equity?

Accepted Answer

A)  6.25% 
B)  7.50% 
C)  9.75% 
D)  10.00% 
E)  11.25% 
A)  6.25% 
B)  7.50% 
C)  9.75% 
D)  10.00% 
E)  11.25%

Question 16

Ratios that measure how efficiently a firm's management uses its assets and equity to generate bottom line net income are known as _______ ratios.

Accepted Answer

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

Question 17

Catherine's Consulting has a net income of $1,400 and a total equity of $12,000. The debt-equity ratio is 1.0 and the plowback is 30%. What is the return on assets?

Accepted Answer

A)  4.24% 
B)  4.64% 
C)  5.23% 
D)  5.83% 
E)  None of these. 
A)  4.24% 
B)  4.64% 
C)  5.23% 
D)  5.83% 
E)  None of these.

Question 18

Why is it important for managers to understand the importance of both the internal and the sustainable rates of growth?

Accepted Answer

One reason that causes firms to go out o

Question 19

Patti's has net income of $1,800,a price-earnings ratio of 12,and earnings per share of $1.20. How many shares of stock are outstanding?

Accepted Answer

A)  1,200 
B)  1,400 
C)  1,500 
D)  1,600 
E)  1,800 
A)  1,200 
B)  1,400 
C)  1,500 
D)  1,600 
E)  1,800

Question 20

The financial ratio measured as net income divided by total assets 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. 
A)  profit margin. 
B)  return on assets. 
C)  return on equity. 
D)  asset turnover. 
E)  earnings before interest and taxes.

Exam 3: Financial Statements Analysis and Financial Models

What is the equity multiplier for 2011?

Which of the following are liquidity ratios? I. cash coverage ratio II. current ratio III. quick ratio IV. inventory turnover

Turner's Inc. has a price-earnings ratio of 16. Alfred's Co. has a price-earnings ratio of 19. Thus,you can state with certainty that one share of stock in Alfred's:

The financial ratio measured as the price per share of stock divided by earnings per share is known as the:

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

What is the quick ratio for 2011?

Catherine's Consulting has a net income of $1,400 and a total equity of $12,000. The debt-equity ratio is 1.0 and the plowback is 30%. What is the internal growth rate for Catherine's consulting?

The sustainable growth rate will be equivalent to the internal growth rate when:

Jupiter Explorers has $6,400 in sales. The profit margin is 4%. There are 6,400 shares of stock outstanding. The market price per share is $1.20. What is the price-earnings ratio?

The long-term debt ratio is probably of most interest to a firm's:

Rosita's Resources paid $250 in interest and $130 in dividends last year. The times interest earned ratio is 3.8 and the depreciation expense is $80. What is the value of the cash coverage ratio?

The quick ratio is measured as:

Ratios that measure a firm's financial leverage are known as ________ ratios.

On a common-size balance sheet,all _______ accounts are shown as a percentage of _______.

Samuelson's has a debt-equity ratio of 40%,sales of $8,000,net income of $600,and total debt of $2,400. What is the return on equity?

Ratios that measure how efficiently a firm's management uses its assets and equity to generate bottom line net income are known as _______ ratios.

Catherine's Consulting has a net income of $1,400 and a total equity of $12,000. The debt-equity ratio is 1.0 and the plowback is 30%. What is the return on assets?

Why is it important for managers to understand the importance of both the internal and the sustainable rates of growth?

Patti's has net income of $1,800,a price-earnings ratio of 12,and earnings per share of $1.20. How many shares of stock are outstanding?

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

Introduction to Corporate Finance

Financial Statements and Cash Flow

Discounted Cash Flow Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model Capm

An Alternative View of Risk and Return: The Arbitrage Pricing Theory

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Raising Capital

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

Short-Term Finance and Planning

Cash Management

Credit and Inventory Management

Mergers, Acquisitions, and Divestitures

Financial Distress

International Corporate Finance

Filters

On a common-size balance sheet,all _ accounts are shown as a percentage of _.