Question 1

A firm has a debt-total asset ratio of 74 percent and a return on total assets of 13 percent. What is the return on equity?

Accepted Answer

A) 26 percent 
B) 50 percent 
C) 65 percent 
D) 84 percent 
E) 135 percent 
A) 26 percent 
B) 50 percent 
C) 65 percent 
D) 84 percent 
E) 135 percent B

Question 2

Billings, Inc. has net income of $161,000, a profit margin of 7.6 percent, and an accounts receivable balance of $127,100. Assume that 66 percent of sales are on credit. What is the days' sales in receivables?

Accepted Answer

A) 21.90 days 
B) 27.56 days 
C) 33.18 days 
D) 35.04 days 
E) 36.19 days 
A) 21.90 days 
B) 27.56 days 
C) 33.18 days 
D) 35.04 days 
E) 36.19 days C

Question 3

The sources and uses of cash over a stated period of time are reflected on the:

Accepted Answer

A) income statement. 
B) balance sheet. 
C) tax reconciliation statement. 
D) statement of cash flows. 
E) statement of operating position. 
A) income statement. 
B) balance sheet. 
C) tax reconciliation statement. 
D) statement of cash flows. 
E) statement of operating position. D

Question 4

How many days on average does it take Precision Tool to sell its inventory? (Use 2012 values)

Accepted Answer

A) 164.30 days 
B) 187.77 days 
C) 219.63 days 
D) 247.46 days 
E) 283.31 days 
A) 164.30 days 
B) 187.77 days 
C) 219.63 days 
D) 247.46 days 
E) 283.31 days

Question 5

A firm has total debt of $4,620 and a debt-equity ratio of 0.57. What is the value of the total assets?

Accepted Answer

A) $6,128.05 
B) $7,253.40 
C) $9,571.95 
D) $11,034.00 
E) $12,725.26 
A) $6,128.05 
B) $7,253.40 
C) $9,571.95 
D) $11,034.00 
E) $12,725.26

Question 6

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

Accepted Answer

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

Question 7

What value does the PEG ratio provide to financial analysts?

Accepted Answer

The PEG ratio divides the PE ratio by th

Question 8

Which one of the following is a source of cash?

Accepted Answer

A) increase in accounts receivable 
B) decrease in notes payable 
C) decrease in common stock 
D) increase in accounts payable 
E) increase in inventory 
A) increase in accounts receivable 
B) decrease in notes payable 
C) decrease in common stock 
D) increase in accounts payable 
E) increase in inventory

Question 9

Which one of the following accurately describes the three parts of the Du Pont identity?

Accepted Answer

A) operating efficiency, equity multiplier, and profitability ratio 
B) financial leverage, operating efficiency, and profitability ratio 
C) equity multiplier, profit margin, and total asset turnover 
D) debt-equity ratio, capital intensity ratio, and profit margin 
E) return on assets, profit margin, and equity multiplier 
A) operating efficiency, equity multiplier, and profitability ratio 
B) financial leverage, operating efficiency, and profitability ratio 
C) equity multiplier, profit margin, and total asset turnover 
D) debt-equity ratio, capital intensity ratio, and profit margin 
E) return on assets, profit margin, and equity multiplier

Question 10

A firm has sales of $2,190, net income of $174, net fixed assets of $1,600, and current assets of $720. The firm has $310 in inventory. What is the common-size statement value of inventory?

Accepted Answer

A) 13.36 percent 
B) 14.16 percent 
C) 19.38 percent 
D) 30.42 percent 
E) 43.06 percent 
A) 13.36 percent 
B) 14.16 percent 
C) 19.38 percent 
D) 30.42 percent 
E) 43.06 percent

Question 11

It is easier to evaluate a firm using financial statements when the firm:

Accepted Answer

A) is a conglomerate. 
B) has recently merged with its largest competitor. 
C) uses the same accounting procedures as other firms in the industry. 
D) has a different fiscal year than other firms in the industry. 
E) tends to have many one-time events such as asset sales and property acquisitions. 
A) is a conglomerate. 
B) has recently merged with its largest competitor. 
C) uses the same accounting procedures as other firms in the industry. 
D) has a different fiscal year than other firms in the industry. 
E) tends to have many one-time events such as asset sales and property acquisitions.

Question 12

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?

Accepted Answer

A) 0.0 
B) 0.5 
C) 1.0 
D) 1.5 
E) 2.0 
A) 0.0 
B) 0.5 
C) 1.0 
D) 1.5 
E) 2.0

Question 13

Which one of the following statements is correct?

Accepted Answer

A) Book values should always be given precedence over market values. 
B) Financial statements are frequently used as the basis for performance evaluations. 
C) Historical information provides no value to someone who is predicting future performance. 
D) Potential lenders place little value on financial statement information. 
E) Reviewing financial information over time has very limited value. 
A) Book values should always be given precedence over market values. 
B) Financial statements are frequently used as the basis for performance evaluations. 
C) Historical information provides no value to someone who is predicting future performance. 
D) Potential lenders place little value on financial statement information. 
E) Reviewing financial information over time has very limited value.

Question 14

The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:

Accepted Answer

A) NASDAQ 100. 
B) Standard & Poor's 500. 
C) Standard Industrial Classification code. 
D) Governmental ID code. 
E) Government Engineered Coding System. 
A) NASDAQ 100. 
B) Standard & Poor's 500. 
C) Standard Industrial Classification code. 
D) Governmental ID code. 
E) Government Engineered Coding System.

Question 15

Reliable Cars has sales of $807,200, total assets of $1,105,100, and a profit margin of 9.68 percent. The firm has a total debt ratio of 78 percent. What is the return on equity?

Accepted Answer

A) 13.09 percent 
B) 16.67 percent 
C) 17.68 percent 
D) 28.56 percent 
E) 32.14 percent 
A) 13.09 percent 
B) 16.67 percent 
C) 17.68 percent 
D) 28.56 percent 
E) 32.14 percent

Question 16

What is the price-sales ratio for 2012 if the market price is $18.49 per share?

Accepted Answer

A) 2.43 
B) 3.29 
C) 3.67 
D) 4.12 
E) 4.38 
A) 2.43 
B) 3.29 
C) 3.67 
D) 4.12 
E) 4.38

Question 17

A firm has total assets with a current book value of $68,700, a current market value of $74,300, and a current replacement cost of $75,600. What is the value of Tobin's Q?

Accepted Answer

A) .85 
B) .87 
C) .92 
D) .95 
E) .98 
A) .85 
B) .87 
C) .92 
D) .95 
E) .98

Question 18

Shareholders probably have the most interest in which one of the following sets of ratios?

Accepted Answer

A) return on assets and profit margin 
B) long-term debt and times interest earned 
C) price-earnings and debt-equity 
D) market-to-book and times interest earned 
E) return on equity and price-earnings 
A) return on assets and profit margin 
B) long-term debt and times interest earned 
C) price-earnings and debt-equity 
D) market-to-book and times interest earned 
E) return on equity and price-earnings

Question 19

Big Guy Subs has net income of $150,980, a price-earnings ratio of 12.8, and earnings per share of $0.87. How many shares of stock are outstanding?

Accepted Answer

A) 13,558 
B) 14,407 
C) 165,523 
D) 171,000 
E) 173,540 
A) 13,558 
B) 14,407 
C) 165,523 
D) 171,000 
E) 173,540

Question 20

A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars worth of sales are generated from every $1 in total assets?

Accepted Answer

A) $1.08 
B) $1.14 
C) $1.19 
D) $1.26 
E) $1.30 
A) $1.08 
B) $1.14 
C) $1.19 
D) $1.26 
E) $1.30

Exam 3: Working With Financial Statements

A firm has a debt-total asset ratio of 74 percent and a return on total assets of 13 percent. What is the return on equity?

Billings, Inc. has net income of $161,000, a profit margin of 7.6 percent, and an accounts receivable balance of $127,100. Assume that 66 percent of sales are on credit. What is the days' sales in receivables?

The sources and uses of cash over a stated period of time are reflected on the:

How many days on average does it take Precision Tool to sell its inventory? (Use 2012 values)

A firm has total debt of $4,620 and a debt-equity ratio of 0.57. What is the value of the total assets?

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

What value does the PEG ratio provide to financial analysts?

Which one of the following is a source of cash?

Which one of the following accurately describes the three parts of the Du Pont identity?

A firm has sales of $2,190, net income of $174, net fixed assets of $1,600, and current assets of $720. The firm has $310 in inventory. What is the common-size statement value of inventory?

It is easier to evaluate a firm using financial statements when the firm:

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?

Which one of the following statements is correct?

The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:

Reliable Cars has sales of $807,200, total assets of $1,105,100, and a profit margin of 9.68 percent. The firm has a total debt ratio of 78 percent. What is the return on equity?

What is the price-sales ratio for 2012 if the market price is $18.49 per share?

A firm has total assets with a current book value of $68,700, a current market value of $74,300, and a current replacement cost of $75,600. What is the value of Tobin's Q?

Shareholders probably have the most interest in which one of the following sets of ratios?

Big Guy Subs has net income of $150,980, a price-earnings ratio of 12.8, and earnings per share of $0.87. How many shares of stock are outstanding?

A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars worth of sales are generated from every $1 in total assets?

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 Dividend Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Risk Management: An Introduction to Financial Engineering

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters