Question 1

Which one of the following transactions will increase the liquidity of a firm?

Accepted Answer

A)  Cash purchase of new production equipment 
B)  Payment of an account payable 
C)  Cash purchase of inventory 
D)  Credit sale of inventory at cost 
E)  Cash payment of employee wages 
A)  Cash purchase of new production equipment 
B)  Payment of an account payable 
C)  Cash purchase of inventory 
D)  Credit sale of inventory at cost 
E)  Cash payment of employee wages

Question 2

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

Accepted Answer

A)  zero percent. 
B)  100 percent. 
C)  equal to the ROA. 
D)  negative. 
E)  infinite. 
A)  zero percent. 
B)  100 percent. 
C)  equal to the ROA. 
D)  negative. 
E)  infinite.

Question 3

Kessler, Inc. has accounts receivable of $31,600, total assets of $311,500, cost of goods sold of $208,400, and a capital intensity ratio of 1.08. What is the accounts receivables turnover rate?

Accepted Answer

A)  8.99 
B)  9.13 
C)  9.42 
D)  9.61 
E)  9.72 
A)  8.99 
B)  9.13 
C)  9.42 
D)  9.61 
E)  9.72

Question 4

The Inside Door has total debt of $78,600, total equity of $214,000, and a return on equity of 14.5 percent. What is the return on assets?

Accepted Answer

A)  9.14 percent 
B)  10.61 percent 
C)  21.45 percent 
D)  34.61 percent 
E)  39.48 percent 
A)  9.14 percent 
B)  10.61 percent 
C)  21.45 percent 
D)  34.61 percent 
E)  39.48 percent

Question 5

A fire has destroyed a large percentage of the financial records of the Strongwell Co. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 13.8 percent. Sales were $979,000, the total debt ratio was 0.42, and total debt was $548,000. What is the return on assets?

Accepted Answer

A)  6.92 percent 
B)  8.00 percent 
C)  8.45 percent 
D)  9.03 percent 
E)  9.29 percent 
A)  6.92 percent 
B)  8.00 percent 
C)  8.45 percent 
D)  9.03 percent 
E)  9.29 percent

Question 6

New Steel Products has total assets of $991,000, a total asset turnover rate of 1.1, a debt-equity ratio of 0.6, and a return on equity of 8.7 percent. What is the firm's net income?

Accepted Answer

A)  $53,885.63 
B)  $58,303.33 
C)  $64,624.14 
D)  $70,548.09 
E)  $77,236.67 
A)  $53,885.63 
B)  $58,303.33 
C)  $64,624.14 
D)  $70,548.09 
E)  $77,236.67

Question 7

For the most recent year, Wilson Enterprises had sales of $689,000, cost of goods sold of $470,300, depreciation expense of $61,200, and additions to retained earnings of $48,560. The firm currently has 12,000 shares of common stock outstanding, and the previous year's dividends per share were $1.18. Assuming a 35 percent tax rate, what was the times interest earned ratio?

Accepted Answer

A)  1.47 
B)  2.09 
C)  2.58 
D)  3.15 
E)  3.67 
A)  1.47 
B)  2.09 
C)  2.58 
D)  3.15 
E)  3.67

Question 8

Which of the following will increase the sustainable rate of growth for a firm? I. Decreasing the profit margin
II) Increasing the dividend payout ratio
III) Decreasing the capital intensity ratio
IV) Increasing the target debt-equity ratio

Accepted Answer

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

Question 9

Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of $1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal to 28 percent of sales. What is the cash coverage ratio?

Accepted Answer

A)  6.33 
B)  7.51 
C)  9.10 
D)  10.23 
E)  10.98 
A)  6.33 
B)  7.51 
C)  9.10 
D)  10.23 
E)  10.98

Question 10

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?

Accepted Answer

A)  0.46 
B)  0.54 
C)  1.21 
D)  1.85 
E)  2.17 
A)  0.46 
B)  0.54 
C)  1.21 
D)  1.85 
E)  2.17

Question 11

Which one of the following is a measure of long-term solvency?

Accepted Answer

A)  Price-earnings ratio 
B)  Profit margin 
C)  Equity multiplier 
D)  Receivables turnover 
E)  Quick ratio 
A)  Price-earnings ratio 
B)  Profit margin 
C)  Equity multiplier 
D)  Receivables turnover 
E)  Quick ratio

Question 12

Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800 for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the sustainable growth rate?

Accepted Answer

A)  7.38 percent 
B)  8.27 percent 
C)  9.11 percent 
D)  9.62 percent 
E)  10.38 percent 
A)  7.38 percent 
B)  8.27 percent 
C)  9.11 percent 
D)  9.62 percent 
E)  10.38 percent

Question 13

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

Accepted Answer

A)  BEC 
B)  SED 
C)  BID 
D)  SIC 
E)  SBC 
A)  BEC 
B)  SED 
C)  BID 
D)  SIC 
E)  SBC

Question 14

A firm has $42,900 in receivables and $211,800 in total assets. The total asset turnover rate is 1.45 and the profit margin is 4.2 percent. How long on average does it take the firm to collect its receivables?

Accepted Answer

A)  7.16 days 
B)  9.45 days 
C)  11.68 days 
D)  31.25 days 
E)  50.99 days 
A)  7.16 days 
B)  9.45 days 
C)  11.68 days 
D)  31.25 days 
E)  50.99 days

Question 15

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

Accepted Answer

A)  5.72 percent 
B)  6.84 percent 
C)  7.12 percent 
D)  9.58 percent 
E)  10.62 percent 
A)  5.72 percent 
B)  6.84 percent 
C)  7.12 percent 
D)  9.58 percent 
E)  10.62 percent

Question 16

Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio?

Accepted Answer

A)  0.88 
B)  1.67 
C)  3.09 
D)  5.59 
E)  8.10 
A)  0.88 
B)  1.67 
C)  3.09 
D)  5.59 
E)  8.10

Question 17

Common-size financial statements present all balance sheet account values as a percentage of:

Accepted Answer

A)  the forecasted budget. 
B)  sales. 
C)  total equity. 
D)  total assets. 
E)  last year's account value. 
A)  the forecasted budget. 
B)  sales. 
C)  total equity. 
D)  total assets. 
E)  last year's account value.

Question 18

Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?

Accepted Answer

A)  0.22 
B)  0.26 
C)  0.67 
D)  1.49 
E)  3.85 
A)  0.22 
B)  0.26 
C)  0.67 
D)  1.49 
E)  3.85

Question 19

Underwood Enterprises earns $0.07 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales. The firm pays out 20 percent of its profits to its shareholders. What is the internal growth rate?

Accepted Answer

A)  6.37 percent 
B)  7.76 percent 
C)  8.80 percent 
D)  9.12 percent 
E)  9.65 percent 
A)  6.37 percent 
B)  7.76 percent 
C)  8.80 percent 
D)  9.12 percent 
E)  9.65 percent

Question 20

Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Accepted Answer

A)  0.04 
B)  0.08 
C)  0.87 
D)  1.21 
E)  3.45 
A)  0.04 
B)  0.08 
C)  0.87 
D)  1.21 
E)  3.45

Which one of the following transactions will increase the liquidity of a firm?

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

Kessler, Inc. has accounts receivable of $31,600, total assets of $311,500, cost of goods sold of $208,400, and a capital intensity ratio of 1.08. What is the accounts receivables turnover rate?

The Inside Door has total debt of $78,600, total equity of $214,000, and a return on equity of 14.5 percent. What is the return on assets?

New Steel Products has total assets of $991,000, a total asset turnover rate of 1.1, a debt-equity ratio of 0.6, and a return on equity of 8.7 percent. What is the firm's net income?

Which of the following will increase the sustainable rate of growth for a firm? I. Decreasing the profit margin II) Increasing the dividend payout ratio III) Decreasing the capital intensity ratio IV) Increasing the target debt-equity ratio

Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of $1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal to 28 percent of sales. What is the cash coverage ratio?

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?

Which one of the following is a measure of long-term solvency?

Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800 for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the sustainable growth rate?

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

A firm has $42,900 in receivables and $211,800 in total assets. The total asset turnover rate is 1.45 and the profit margin is 4.2 percent. How long on average does it take the firm to collect its receivables?

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio?

Common-size financial statements present all balance sheet account values as a percentage of:

Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?

Underwood Enterprises earns $0.07 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales. The firm pays out 20 percent of its profits to its shareholders. What is the internal growth rate?

Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Introduction to Financial Management

Financial Statements, Taxes, and Cash Flow

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters

Exam 3: Working With Financial Statements

Which one of the following transactions will increase the liquidity of a firm?

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

Kessler, Inc. has accounts receivable of $31,600, total assets of $311,500, cost of goods sold of $208,400, and a capital intensity ratio of 1.08. What is the accounts receivables turnover rate?

The Inside Door has total debt of $78,600, total equity of $214,000, and a return on equity of 14.5 percent. What is the return on assets?

New Steel Products has total assets of $991,000, a total asset turnover rate of 1.1, a debt-equity ratio of 0.6, and a return on equity of 8.7 percent. What is the firm's net income?

Which of the following will increase the sustainable rate of growth for a firm? I. Decreasing the profit margin II) Increasing the dividend payout ratio III) Decreasing the capital intensity ratio IV) Increasing the target debt-equity ratio

Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of $1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal to 28 percent of sales. What is the cash coverage ratio?

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?

Which one of the following is a measure of long-term solvency?

Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800 for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the sustainable growth rate?

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

A firm has $42,900 in receivables and $211,800 in total assets. The total asset turnover rate is 1.45 and the profit margin is 4.2 percent. How long on average does it take the firm to collect its receivables?

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio?

Common-size financial statements present all balance sheet account values as a percentage of:

Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?

Underwood Enterprises earns $0.07 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales. The firm pays out 20 percent of its profits to its shareholders. What is the internal growth rate?

Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Introduction to Financial Management

Financial Statements, Taxes, and Cash Flow

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Equity Markets and Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Some Lessons From Capital Market History

Risk and Return

Cost of Capital

Leverage and Capital Structure

Dividends and Dividend Policy

Raising Capital

Short-Term Financial Planning

Working Capital Management

International Aspects of Financial Management

Filters