Question 1

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

Accepted Answer

A) equity multiplier. 
B) return on equity. 
C) price-earnings ratio. 
D) DuPont identity. 
E) return on assets. 
A) equity multiplier. 
B) return on equity. 
C) price-earnings ratio. 
D) DuPont identity. 
E) return on assets.

Question 2

Assume a firm is operating at full capacity.Which one of these accounts is least apt to vary directly with sales?

Accepted Answer

A) Inventory 
B) Cash 
C) Long-term debt 
D) Accounts payable 
E) Fixed assets 
A) Inventory 
B) Cash 
C) Long-term debt 
D) Accounts payable 
E) Fixed assets

Question 3

Nails and More has net income of $13,100,total equity of $86,000,a dividend payout ratio of 25 percent,and an equity multiplier of 1.4.What is the internal rate of growth?

Accepted Answer

A) 4.03% 
B) 4.63% 
C) 8.01% 
D) 3.54% 
E) 8.89% 
A) 4.03% 
B) 4.63% 
C) 8.01% 
D) 3.54% 
E) 8.89%

Question 4

Which one of these measures a firm's operating and asset use efficiency as well as its financial leverage?

Accepted Answer

A) Equity multiplier 
B) Capital intensity ratio 
C) DuPont identity 
D) Profit margin 
E) Return on assets 
A) Equity multiplier 
B) Capital intensity ratio 
C) DuPont identity 
D) Profit margin 
E) Return on assets

Question 5

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.
 
What is the total asset turnover?

Accepted Answer

A) 0.86 times 
B) 1.17 times 
C) 1.39 times 
D) 0.92 times 
E) 1.05 times 
A) 0.86 times 
B) 1.17 times 
C) 1.39 times 
D) 0.92 times 
E) 1.05 times

Question 6

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.
 
What is the profit margin?

Accepted Answer

A) 20.11% 
B) 4.58% 
C) 9.78% 
D) 7.30% 
E) 14.29% 
A) 20.11% 
B) 4.58% 
C) 9.78% 
D) 7.30% 
E) 14.29%

Question 7

Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are often referred to as

Accepted Answer

A) asset management ratios. 
B) liquidity measures. 
C) leverage ratios. 
D) profitability ratios. 
E) utilization ratios. 
A) asset management ratios. 
B) liquidity measures. 
C) leverage ratios. 
D) profitability ratios. 
E) utilization ratios.

Question 8

Yesterday,ABC stock sold for $28 a share.Today,the overall market fell,and ABC stock is now selling for $22 a share.Which of these ratios for ABC will be affected by this market reaction? Assume all else is held constant.

Accepted Answer

A) Enterprise value multiple and price-earnings ratio 
B) Earnings per share and price-earnings ratio 
C) Return on equity and return on assets 
D) Return on book equity and market-to-book ratio 
E) Price-earnings ratio and return on book equity 
A) Enterprise value multiple and price-earnings ratio 
B) Earnings per share and price-earnings ratio 
C) Return on equity and return on assets 
D) Return on book equity and market-to-book ratio 
E) Price-earnings ratio and return on book equity

Question 9

Which cash coverage ratio would a lender prefer its borrower have?

Accepted Answer

A) −1.5 
B) −0.5 
C) 0 
D) 0.5 
E) 1.5 
A) −1.5 
B) −0.5 
C) 0 
D) 0.5 
E) 1.5

Question 10

Juno's has sales of $528,000,a tax rate of 34 percent,a dividend payout ratio of 35 percent,and a profit margin of 5.7 percent.What is the addition to retained earnings?

Accepted Answer

A) $10,503.00 
B) $19,562.40 
C) $11,207.00 
D) $18,472.42 
E) $19,863.36 
A) $10,503.00 
B) $19,562.40 
C) $11,207.00 
D) $18,472.42 
E) $19,863.36

Question 11

The lower a firm's inventory turnover,the

Accepted Answer

A) longer it takes the firm to collect payment on its sales. 
B) faster the firm collects payment on its sales. 
C) faster the firm sells its inventory. 
D) longer inventory sits on the firm's shelves. 
E) smaller the amount of inventory held by the firm. 
A) longer it takes the firm to collect payment on its sales. 
B) faster the firm collects payment on its sales. 
C) faster the firm sells its inventory. 
D) longer inventory sits on the firm's shelves. 
E) smaller the amount of inventory held by the firm.

Question 12

A firm has a total debt ratio of 0.47.This means the firm has $0.47 in debt for every

Accepted Answer

A) $.53 in equity. 
B) $1.47 in total assets. 
C) $1.53 in total assets. 
D) $1 in total equity. 
E) $1.47 in total equity. 
A) $.53 in equity. 
B) $1.47 in total assets. 
C) $1.53 in total assets. 
D) $1 in total equity. 
E) $1.47 in total equity.

Question 13

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.
 
What is the debt-equity ratio?

Accepted Answer

A) 0.75 times 
B) 1.33 times 
C) 1.50 times 
D) 0.98 times 
E) 1.22 times 
A) 0.75 times 
B) 1.33 times 
C) 1.50 times 
D) 0.98 times 
E) 1.22 times

Question 14

Southern Markets has a profit margin of 4.2 percent,a return on assets of 9.7 percent,and a debt-equity ratio of 0.51.What is the return on equity?

Accepted Answer

A) 18.33% 
B) 13.49% 
C) 11.28% 
D) 14.65% 
E) 16.16% 
A) 18.33% 
B) 13.49% 
C) 11.28% 
D) 14.65% 
E) 16.16%

Question 15

Which one of these best measures a firm's long-run ability to meet its obligations?

Accepted Answer

A) Cash ratio 
B) Total asset turnover 
C) EV multiple 
D) Return on equity 
E) Equity multiplier 
A) Cash ratio 
B) Total asset turnover 
C) EV multiple 
D) Return on equity 
E) Equity multiplier

Question 16

The Top Shop has net income of $648 and total equity of $6,600.The debt-equity ratio is 0.6 and the plowback ratio is 55 percent.What is the internal growth rate?

Accepted Answer

A) 3.49% 
B) 3.87% 
C) 4.92% 
D) 5.88% 
E) 4.33% 
A) 3.49% 
B) 3.87% 
C) 4.92% 
D) 5.88% 
E) 4.33%

Question 17

Tree Top Furniture has current sales of $287,600 and fixed assets of $314,000.The firm is currently operating at 96 percent of capacity.What is the maximum percentage increase the firm can have in sales without investing in additional fixed assets?

Accepted Answer

A) 4.17% 
B) 4.00% 
C) 6.72% 
D) 3.92% 
E) 6.33% 
A) 4.17% 
B) 4.00% 
C) 6.72% 
D) 3.92% 
E) 6.33%

Question 18

When creating pro forma statements,the external financing need will increase if you

Accepted Answer

A) increase the corporate tax rate. 
B) decrease the dividend payout ratio. 
C) increase the plowback ratio. 
D) decrease the rate of sales growth. 
E) decrease the projected level of sales. 
A) increase the corporate tax rate. 
B) decrease the dividend payout ratio. 
C) increase the plowback ratio. 
D) decrease the rate of sales growth. 
E) decrease the projected level of sales.

Question 19

Which one of these is calculated as: 365 / (Cost of goods sold / Inventory)?

Accepted Answer

A) Total asset turnover 
B) Inventory turnover 
C) Days sales in receivables 
D) Days sales in inventory 
E) Capital intensity ratio 
A) Total asset turnover 
B) Inventory turnover 
C) Days sales in receivables 
D) Days sales in inventory 
E) Capital intensity ratio

Question 20

A firm has 4,250 shares of stock outstanding with a market value of $16.65 a share,$64,800 of long-term debt with an interest rate of 7.5 percent,$21,900 of short-term debt,cash on hand of $5,200,sales of $213,000,costs of $126,200,and depreciation of $13,400.The tax rate is 35 percent.What is the enterprise value multiple?

Accepted Answer

A) 1.50 times 
B) 1.67 times 
C) 2.33 times 
D) 2.18 times 
E) 1.92 times 
A) 1.50 times 
B) 1.67 times 
C) 2.33 times 
D) 2.18 times 
E) 1.92 times

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

Assume a firm is operating at full capacity.Which one of these accounts is least apt to vary directly with sales?

Nails and More has net income of $13,100,total equity of $86,000,a dividend payout ratio of 25 percent,and an equity multiplier of 1.4.What is the internal rate of growth?

Which one of these measures a firm's operating and asset use efficiency as well as its financial leverage?

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the total asset turnover?

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the profit margin?

Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are often referred to as

Yesterday,ABC stock sold for $28 a share.Today,the overall market fell,and ABC stock is now selling for $22 a share.Which of these ratios for ABC will be affected by this market reaction? Assume all else is held constant.

Which cash coverage ratio would a lender prefer its borrower have?

Juno's has sales of $528,000,a tax rate of 34 percent,a dividend payout ratio of 35 percent,and a profit margin of 5.7 percent.What is the addition to retained earnings?

The lower a firm's inventory turnover,the

A firm has a total debt ratio of 0.47.This means the firm has $0.47 in debt for every

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the debt-equity ratio?

Southern Markets has a profit margin of 4.2 percent,a return on assets of 9.7 percent,and a debt-equity ratio of 0.51.What is the return on equity?

Which one of these best measures a firm's long-run ability to meet its obligations?

The Top Shop has net income of $648 and total equity of $6,600.The debt-equity ratio is 0.6 and the plowback ratio is 55 percent.What is the internal growth rate?

Tree Top Furniture has current sales of $287,600 and fixed assets of $314,000.The firm is currently operating at 96 percent of capacity.What is the maximum percentage increase the firm can have in sales without investing in additional fixed assets?

When creating pro forma statements,the external financing need will increase if you

Which one of these is calculated as: 365 / (Cost of goods sold / Inventory)?

Introduction to Corporate Finance

Financial Statements and Cash Flow

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividends and Other Payouts

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

Filters

Exam 3: Financial Statements Analysis and Financial Models

The amount shareholders are willing to pay for each $1 per share of annual earnings a firm generates is indicated by the

Assume a firm is operating at full capacity.Which one of these accounts is least apt to vary directly with sales?

Nails and More has net income of $13,100,total equity of $86,000,a dividend payout ratio of 25 percent,and an equity multiplier of 1.4.What is the internal rate of growth?

Which one of these measures a firm's operating and asset use efficiency as well as its financial leverage?

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the total asset turnover?

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the profit margin?

Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are often referred to as

Yesterday,ABC stock sold for $28 a share.Today,the overall market fell,and ABC stock is now selling for $22 a share.Which of these ratios for ABC will be affected by this market reaction? Assume all else is held constant.

Which cash coverage ratio would a lender prefer its borrower have?

Juno's has sales of $528,000,a tax rate of 34 percent,a dividend payout ratio of 35 percent,and a profit margin of 5.7 percent.What is the addition to retained earnings?

The lower a firm's inventory turnover,the

A firm has a total debt ratio of 0.47.This means the firm has $0.47 in debt for every

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the debt-equity ratio?

Southern Markets has a profit margin of 4.2 percent,a return on assets of 9.7 percent,and a debt-equity ratio of 0.51.What is the return on equity?

Which one of these best measures a firm's long-run ability to meet its obligations?

The Top Shop has net income of $648 and total equity of $6,600.The debt-equity ratio is 0.6 and the plowback ratio is 55 percent.What is the internal growth rate?

Tree Top Furniture has current sales of $287,600 and fixed assets of $314,000.The firm is currently operating at 96 percent of capacity.What is the maximum percentage increase the firm can have in sales without investing in additional fixed assets?

When creating pro forma statements,the external financing need will increase if you

Which one of these is calculated as: 365 / (Cost of goods sold / Inventory)?

Introduction to Corporate Finance

Financial Statements and Cash Flow

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Return and Risk: The Capital Asset Pricing Model Capm

Risk, Cost of Capital, and Valuation

Efficient Capital Markets and Behavioral Challenges

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Dividends and Other Payouts

Options and Corporate Finance

Short-Term Finance and Planning

Raising Capital

International Corporate Finance

Mergers and Acquisitions Web Only

Filters