Exam 3: Working With Financial Statements

A firm has a debt-equity ratio of 57 percent, a total asset turnover of 1.12, and a profit margin of 4.9 percent. The total equity is $511,640. What is the amount of the net income?

A firm has sales of $3,400, net income of $390, total assets of $4,500, and total equity of $2,750. Interest expense is $40. What is the common-size statement value of the interest expense?

According to the Statement of Cash Flows, an increase in interest expense will _____ the cash flow from _____ activities.

What is the amount of the dividends paid for 2012?

Which one of the following statements is correct?

According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.

What is the return on equity? (Use 2012 values)

A firm uses 2012 as the base year for its financial statements. The common-size, base-year statement for 2012 has an inventory value of 1.08. This is interpreted to mean that the 2009 inventory is equal to 108 percent of which one of the following?

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a common point in time?

Lancaster Toys has a profit margin of 9.6 percent, a total asset turnover of 1.71, and a return on equity of 21.01 percent. What is the debt-equity ratio?

Which of the following represent problems encountered when comparing the financial statements of two separate entities? I. Either one, or both, of the firms may be conglomerates and thus have unrelated lines of business. II. The operations of the two firms may vary geographically. III. The firms may use differing accounting methods. IV. The two firms may be seasonal in nature and have different fiscal year ends.

On the Statement of Cash Flows, which of the following are considered operating activities? I. costs of goods sold II. decrease in accounts payable III. interest paid IV. dividends paid

The Dockside Inn has net income for the most recent year of $8,450. The tax rate was 38 percent. The firm paid $1,300 in total interest expense and deducted $1,900 in depreciation expense. What was the cash coverage ratio for the year?

Dee's has a fixed asset turnover rate of 1.12 and a total asset turnover rate of 0.91. Sam's has a fixed asset turnover rate of 1.15 and a total asset turnover rate of 0.88. Both companies have similar operations. Based on this information, Dee's must be doing which one of the following?

Oscar's Dog House has a profit margin of 5.6 percent, a return on assets of 12.5 percent, and an equity multiplier of 1.49. What is the return on equity?

Assume a firm has a positive cash balance which is increasing annually. Why then is it important to analyze a statement of cash flows?

In general, what does a high Tobin's Q value indicate and how reliable does that value tend to be?

High Mountain Foods has an equity multiplier of 1.55, a total asset turnover of 1.3, and a profit margin of 7.5 percent. What is the return on equity?

Which of the following ratios are measures of a firm's liquidity? I. cash coverage ratio II. interval measure III. debt-equity ratio IV. quick ratio

Dixie Supply has total assets with a current book value of $368,900 and a current replacement cost of $486,200. The market value of these assets is $464,800. What is the value of Tobin's Q?