Question 1

If a firm has a receivables turnover of 12, on average, which of the following would be the firm's average collection period?

Accepted Answer

A) 12 months 
B) 1 month 
C) 8.33 months67 
D) not enough information given 
A) 12 months 
B) 1 month 
C) 8.33 months67 
D) not enough information given B

Question 2

The price-to-book ratio measures the market's value of the firm relative to balance sheet equity.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is not a variable cost?

Accepted Answer

A) direct materials 
B) direct labor 
C) delivery costs 
D) rent 
E) all of the above are variable costs 
A) direct materials 
B) direct labor 
C) delivery costs 
D) rent 
E) all of the above are variable costs D

Question 4

The current ratio of a firm with current assets of $300,000, current liabilities of $100,000, and inventory of $100,000 is:

Accepted Answer

A) 	1 
B) 	2 
C) 	3 
D) 	4 
A) 	1 
B) 	2 
C) 	3 
D) 	4

Question 5

The extent to which assets are used to support sales is indicated by which of the following ratios:

Accepted Answer

A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) profitability ratios 
A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) profitability ratios

Question 6

A firm with total liabilities and owners' equity of $100,000 and net sales of $50,000 would have a total asset turnover of:

Accepted Answer

A) 100 
B) .50 
C) 2 
D) not enough information given 
A) 100 
B) .50 
C) 2 
D) not enough information given

Question 7

If the total asset turnover of a firm is 1.5, total assets are $500,000, and net income is $50,000, what is the profit margin?

Accepted Answer

A) 1% 
B) 5% 
C) 6.7% 
D) not enough information available 
A) 1% 
B) 5% 
C) 6.7% 
D) not enough information available

Question 8

As part of the measurement of financial leverage, the total debt ratio is calculated as:

Accepted Answer

A) total liabilities divided by total assets 
B) total liabilities times total assets 
C) current liabilities divided by total assets 
D) total assets minus current liabilities divided by total liabilities divided by total liabilities 
A) total liabilities divided by total assets 
B) total liabilities times total assets 
C) current liabilities divided by total assets 
D) total assets minus current liabilities divided by total liabilities divided by total liabilities

Question 9

Which item is not included in the calculation for both the quick ratio and the current ratio?

Accepted Answer

A) accounts receivable 
B) current assets 
C) inventories 
D) current liabilities 
A) accounts receivable 
B) current assets 
C) inventories 
D) current liabilities

Question 10

Potential creditors of a firm might analyze financial statements to gauge the firm's ability to make timely payments of interest and principal.

Accepted Answer

A) True 
 B)False

Question 11

Net working capital is current assets plus current liabilities.

Accepted Answer

A) True 
 B)False

Question 12

Cross-sectional analysis is used to evaluate a firm's performance over time.

Accepted Answer

A) True 
 B)False

Question 13

A current ratio of 2.0 is desirable and it means that a firm has twice as many current liabilities as current assets.

Accepted Answer

A) True 
 B)False

Question 14

The equity multiplier is calculated as:

Accepted Answer

A) total assets divided by owners' equity 
B) net income divided by owners' equity 
C) net income divided by total assets 
D) net sales divided by total assets 
A) total assets divided by owners' equity 
B) net income divided by owners' equity 
C) net income divided by total assets 
D) net sales divided by total assets

Question 15

The quick ratio of a firm with current assets of $300,000, current liabilities of $100,000 and inventory of $100,000 is:

Accepted Answer

A) 1:1 
B) 2:1 
C) 3:1 
D) 4:1 
A) 1:1 
B) 2:1 
C) 3:1 
D) 4:1

Question 16

_____________ costs are a function of quantity sold, not time. None of the above clone of prior item.

Accepted Answer

A) fixed 
B) semi-variable 
C) operating 
D) semi-fixed 
E) none of the above 
A) fixed 
B) semi-variable 
C) operating 
D) semi-fixed 
E) none of the above

Question 17

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

Accepted Answer

A) 10 
B) 36.5 
C) 25 
D) 14.6 
A) 10 
B) 36.5 
C) 25 
D) 14.6

Question 18

Ratios standardize balance sheet and income statement numbers, thus minimizing the effect of firm size.

Accepted Answer

A) True 
 B)False

Question 19

Using the DuPont system of analysis and holding other factors constant, decrease in total asset turnover will result in ________ in the return on equity.

Accepted Answer

A) an increase 
B) a decrease 
C) no change 
D) an undetermined change 
A) an increase 
B) a decrease 
C) no change 
D) an undetermined change

Question 20

The extent to which assets are financed by borrowed funds and other liabilities is indicated by:

Accepted Answer

A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) profitability ratios 
A) liquidity ratios 
B) asset utilization ratios 
C) financial leverage ratios 
D) profitability ratios

If a firm has a receivables turnover of 12, on average, which of the following would be the firm's average collection period?

The price-to-book ratio measures the market's value of the firm relative to balance sheet equity.

Which of the following is not a variable cost?

The current ratio of a firm with current assets of $300,000, current liabilities of $100,000, and inventory of $100,000 is:

The extent to which assets are used to support sales is indicated by which of the following ratios:

A firm with total liabilities and owners' equity of $100,000 and net sales of $50,000 would have a total asset turnover of:

If the total asset turnover of a firm is 1.5, total assets are $500,000, and net income is $50,000, what is the profit margin?

As part of the measurement of financial leverage, the total debt ratio is calculated as:

Which item is not included in the calculation for both the quick ratio and the current ratio?

Potential creditors of a firm might analyze financial statements to gauge the firm's ability to make timely payments of interest and principal.

Net working capital is current assets plus current liabilities.

Cross-sectional analysis is used to evaluate a firm's performance over time.

A current ratio of 2.0 is desirable and it means that a firm has twice as many current liabilities as current assets.

The equity multiplier is calculated as:

The quick ratio of a firm with current assets of $300,000, current liabilities of $100,000 and inventory of $100,000 is:

_____________ costs are a function of quantity sold, not time. None of the above clone of prior item.

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

Ratios standardize balance sheet and income statement numbers, thus minimizing the effect of firm size.

Using the DuPont system of analysis and holding other factors constant, decrease in total asset turnover will result in ________ in the return on equity.

The extent to which assets are financed by borrowed funds and other liabilities is indicated by:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 14: Financial Analysis and Long-Term Financial Planning

If a firm has a receivables turnover of 12, on average, which of the following would be the firm's average collection period?

The price-to-book ratio measures the market's value of the firm relative to balance sheet equity.

Which of the following is not a variable cost?

The current ratio of a firm with current assets of $300,000, current liabilities of $100,000, and inventory of $100,000 is:

The extent to which assets are used to support sales is indicated by which of the following ratios:

A firm with total liabilities and owners' equity of $100,000 and net sales of $50,000 would have a total asset turnover of:

If the total asset turnover of a firm is 1.5, total assets are $500,000, and net income is $50,000, what is the profit margin?

As part of the measurement of financial leverage, the total debt ratio is calculated as:

Which item is not included in the calculation for both the quick ratio and the current ratio?

Potential creditors of a firm might analyze financial statements to gauge the firm's ability to make timely payments of interest and principal.

Net working capital is current assets plus current liabilities.

Cross-sectional analysis is used to evaluate a firm's performance over time.

A current ratio of 2.0 is desirable and it means that a firm has twice as many current liabilities as current assets.

The equity multiplier is calculated as:

The quick ratio of a firm with current assets of $300,000, current liabilities of $100,000 and inventory of $100,000 is:

_____________ costs are a function of quantity sold, not time. None of the above clone of prior item.

Find the average payment period if accounts payable is $20,000, cost of goods sold is $200,000, and sales are $500,000.

Ratios standardize balance sheet and income statement numbers, thus minimizing the effect of firm size.

Using the DuPont system of analysis and holding other factors constant, decrease in total asset turnover will result in ________ in the return on equity.

The extent to which assets are financed by borrowed funds and other liabilities is indicated by:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters