Question 1

In common-size financial statements,

Accepted Answer

A)  all balance sheet items are divided by total liabilities. 
B)  total sales are divided by total assets. 
C)  depreciation expense is divided by total sales. 
D)  accrued taxes are divided by total sales. 
E)  net income is divided by total assets. 
A)  all balance sheet items are divided by total liabilities. 
B)  total sales are divided by total assets. 
C)  depreciation expense is divided by total sales. 
D)  accrued taxes are divided by total sales. 
E)  net income is divided by total assets. C

Question 2

Using financial information to aid in decision making is called

Accepted Answer

A)  "what-if" analysis. 
B)  factor analysis. 
C)  financial analysis. 
D)  quantitative analysis. 
E)  managerial economics. 
A)  "what-if" analysis. 
B)  factor analysis. 
C)  financial analysis. 
D)  quantitative analysis. 
E)  managerial economics. C

Question 3

Which of the following is one of the financial statements critical to financial statement analysis?

Accepted Answer

A)  8-K 
B)  SEC registration statement 
C)  Disclosure 
D)  10-Q 
E)  Statement of Cash Flows 
A)  8-K 
B)  SEC registration statement 
C)  Disclosure 
D)  10-Q 
E)  Statement of Cash Flows E

Question 4

Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of candy since 1896. Its products are sold under the familiar brand names Tootsie Roll, Tootsie Roll Pops, Charms, Blow Pops, Cella's, Mason Dots and Mason Crows. Tootsie Roll operates four plants in Illinois, New York, Tennessee and Mexico. Tootsie Roll is traded on the New York Stock Exchange and maintains its head office in Chicago, Illinois.
Tootsie Roll's financial statements for Year 5 and Year 6 are provided below.
Tootsie Roll Industries Inc.
Balance Sheet
As of December 31, Year 6 ($000s)
  
-Tootsie Roll Industries Inc.
Income Statement
As of December 31,Year 6 ($000s)
 
Selected Financial Ratios
 
Referring to the financial statements for Tootsie Roll,what is the difference between the Industry and Tootsie for the net profit margin? (Tootsie - Industry)

Accepted Answer

A)  3.1% 
B)  3.4% 
C)  5.4% 
D)  8.2% 
E)  11.6% 
A)  3.1% 
B)  3.4% 
C)  5.4% 
D)  8.2% 
E)  11.6%

Question 5

If net income was $10,000,interest expense was $4,000,and taxes were $1,000,what is the operating profit margin if sales were $50,000?

Accepted Answer

A)  28% 
B)  30% 
C)  22% 
D)  10% 
E)  20% 
A)  28% 
B)  30% 
C)  22% 
D)  10% 
E)  20%

Question 6

The ________ is a snapshot of the firm at a particular point in time.

Accepted Answer

A)  income statement 
B)  statement of cash flows 
C)  statement of retained earnings 
D)  balance sheet 
E)  None of the above 
A)  income statement 
B)  statement of cash flows 
C)  statement of retained earnings 
D)  balance sheet 
E)  None of the above

Question 7

Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of candy since 1896. Its products are sold under the familiar brand names Tootsie Roll, Tootsie Roll Pops, Charms, Blow Pops, Cella's, Mason Dots and Mason Crows. Tootsie Roll operates four plants in Illinois, New York, Tennessee and Mexico. Tootsie Roll is traded on the New York Stock Exchange and maintains its head office in Chicago, Illinois.
Tootsie Roll's financial statements for Year 5 and Year 6 are provided below.
Tootsie Roll Industries Inc.
Balance Sheet
As of December 31, Year 6 ($000s)
  
-Tootsie Roll Industries Inc.
Income Statement
As of December 31,Year 6 ($000s)
 
Selected Financial Ratios
 
Referring to the financial statements for Tootsie Roll,what is the difference between the Industry and Tootsie for return on assets (ROA)? (Tootsie - Industry)

Accepted Answer

A)  -0.70% 
B)  0.72% 
C)  1.72% 
D)  7.00% 
E)  14.00% 
A)  -0.70% 
B)  0.72% 
C)  1.72% 
D)  7.00% 
E)  14.00%

Question 8

Balance Sheet for year-ended Dec 31 ($000's)
  
-Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
 
Referring to the Blockbuster financial statements,what is the change in ROE from Year 1 to Year 2? (ΔROE =  
-  
)

Accepted Answer

A)  -4.80% 
B)  -4.18% 
C)  -2.87% 
D)  -1.20% 
E)  -1.17% 
A)  -4.80% 
B)  -4.18% 
C)  -2.87% 
D)  -1.20% 
E)  -1.17%

Question 9

Years 1 & 2 ($000,000s)
  
-Income Statement
CFM Majestic Inc.
Years 1 & 2 ($000,000s)
 
Referring to the CFM Majestic financial statements,did ROE rise or fall from Year 1 to Year 2?

Accepted Answer

A)  Fall 
B)  Rise 
A)  Fall 
B)  Rise

Question 10

Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of candy since 1896. Its products are sold under the familiar brand names Tootsie Roll, Tootsie Roll Pops, Charms, Blow Pops, Cella's, Mason Dots and Mason Crows. Tootsie Roll operates four plants in Illinois, New York, Tennessee and Mexico. Tootsie Roll is traded on the New York Stock Exchange and maintains its head office in Chicago, Illinois.
Tootsie Roll's financial statements for Year 5 and Year 6 are provided below.
Tootsie Roll Industries Inc.
Balance Sheet
As of December 31, Year 6 ($000s)
  
-Tootsie Roll Industries Inc.
Income Statement
As of December 31,Year 6 ($000s)
 
Selected Financial Ratios
 
Referring to the financial statements for Tootsie Roll,what amount of leverage (i.e.debt-to-equity)would Tootsie need to make its Year 6 return on equity equal (ROE)to the industry average ROE? (Round to initial ratios to nearest percentage.)

Accepted Answer

A)  0.3456 
B)  0.9200 
C)  1.1333 
D)  1.4200 
E)  1.7632 
A)  0.3456 
B)  0.9200 
C)  1.1333 
D)  1.4200 
E)  1.7632

Question 11

What is a firms times interest earned if it posts revenues of $200,000,taxes of $35,000,expenses of $100,000,and interest of $30,000

Accepted Answer

A)  3.3 times 
B)  2.0 times 
C)  2.2 times 
D)  0.5 times 
E)  1.3 times 
A)  3.3 times 
B)  2.0 times 
C)  2.2 times 
D)  0.5 times 
E)  1.3 times

Question 12

Balance sheets

Accepted Answer

A)  show how the firm raised funds to purchase assets. 
B)  report a firm's activities over a period of time. 
C)  describe a firm's cash flows. 
D)  provide information about a firm's labor costs. 
E)  may not balance if the firm suffered a net loss. 
A)  show how the firm raised funds to purchase assets. 
B)  report a firm's activities over a period of time. 
C)  describe a firm's cash flows. 
D)  provide information about a firm's labor costs. 
E)  may not balance if the firm suffered a net loss.

Question 13

In cross-sectional analysis,a firm's financial ratios are

Accepted Answer

A)  judged against the performance of firms in the same industry. 
B)  compared with the firm's ratios from the most recent period. 
C)  compared with ratios from all firms. 
D)  compared with a general standard. 
E)  plotted over time to isolate trends. 
A)  judged against the performance of firms in the same industry. 
B)  compared with the firm's ratios from the most recent period. 
C)  compared with ratios from all firms. 
D)  compared with a general standard. 
E)  plotted over time to isolate trends.

Question 14

What is a firm's debt ratio if its total assets are $135,000,equity is $75,000,current liabilities are $24,000,and total liabilities are $105,000?

Accepted Answer

A)  140% 
B)  110% 
C)  50% 
D)  60% 
E)  78% 
A)  140% 
B)  110% 
C)  50% 
D)  60% 
E)  78%

Question 15

Find accounts receivable turnover if a firm has an accounts receivable of $80,000,a total asset turnover of .75,and total assets of $230,000.

Accepted Answer

A)  2.15 
B)  3.8 
C)  2.9 
D)  1.5 
E)  0.65 
A)  2.15 
B)  3.8 
C)  2.9 
D)  1.5 
E)  0.65

Question 16

Years 1 & 2 ($000,000s)
  
-Income Statement
CFM Majestic Inc.
Years 1 & 2 ($000,000s)
 
Referring to the CFM Majestic financial statements,which is the bigger or more important determinant of the change in ROE?

Accepted Answer

A)  ROA 
B)  The Equity Multiplier 
A)  ROA 
B)  The Equity Multiplier

Question 17

Years 1 & 2 ($000,000s)
  
-Income Statement
CFM Majestic Inc.
Years 1 & 2 ($000,000s)
 
Referring to the CFM Majestic financial statements,What is Net Profit Margin in Year 1?

Accepted Answer

A)  5.0% 
B)  6.6% 
C)  7.5% 
D)  8.8% 
E)  9.1% 
A)  5.0% 
B)  6.6% 
C)  7.5% 
D)  8.8% 
E)  9.1%

Question 18

Find the return on assets if net income was $55,000,total assets are $115,000,EBIT was $100,000,and equity is $75,000.

Accepted Answer

A)  73.3% 
B)  63.1% 
C)  87.0% 
D)  47.8% 
E)  55.0% 
A)  73.3% 
B)  63.1% 
C)  87.0% 
D)  47.8% 
E)  55.0%

Question 19

An income statement contains all of the following EXCEPT

Accepted Answer

A)  revenues. 
B)  assets. 
C)  losses. 
D)  gains. 
E)  expenses. 
A)  revenues. 
B)  assets. 
C)  losses. 
D)  gains. 
E)  expenses.

Question 20

What is the current ratio if cash is $10,000,accounts receivable are $25,000,inventories are $30,000,accounts payable are $40,000,and accrued payroll is $15,000?

Accepted Answer

A)  2.00 
B)  1.18 
C)  1.13 
D)  0.64 
E)  0.73 
A)  2.00 
B)  1.18 
C)  1.13 
D)  0.64 
E)  0.73

In common-size financial statements,

Using financial information to aid in decision making is called

Which of the following is one of the financial statements critical to financial statement analysis?

If net income was $10,000,interest expense was $4,000,and taxes were $1,000,what is the operating profit margin if sales were $50,000?

The ________ is a snapshot of the firm at a particular point in time.

Balance Sheet for year-ended Dec 31 ($000's) -Blockbuster Inc. Income Statement for year-ended Dec 31 ($000's) Referring to the Blockbuster financial statements,what is the change in ROE from Year 1 to Year 2? (ΔROE = - )

Years 1 & 2 ($000,000s) -Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Referring to the CFM Majestic financial statements,did ROE rise or fall from Year 1 to Year 2?

What is a firms times interest earned if it posts revenues of $200,000,taxes of $35,000,expenses of $100,000,and interest of $30,000

Balance sheets

In cross-sectional analysis,a firm's financial ratios are

What is a firm's debt ratio if its total assets are $135,000,equity is $75,000,current liabilities are $24,000,and total liabilities are $105,000?

Find accounts receivable turnover if a firm has an accounts receivable of $80,000,a total asset turnover of .75,and total assets of $230,000.

Years 1 & 2 ($000,000s) -Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Referring to the CFM Majestic financial statements,which is the bigger or more important determinant of the change in ROE?

Years 1 & 2 ($000,000s) -Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Referring to the CFM Majestic financial statements,What is Net Profit Margin in Year 1?

Find the return on assets if net income was $55,000,total assets are $115,000,EBIT was $100,000,and equity is $75,000.

An income statement contains all of the following EXCEPT

What is the current ratio if cash is $10,000,accounts receivable are $25,000,inventories are $30,000,accounts payable are $40,000,and accrued payroll is $15,000?

Overview of Finance

Time Value of Money - Introduction

Time Value of Money - Streams and Valuations

Risk and Return - Introduction

Portfolio Theory

Interest Rates and Bond Valuation

Stock Valuation and Market Efficiency

Capital Budgeting Techniques

Capital Budgeting - Cash Flows

Cost of Capital

Capital Structure

Dividends, repurchases, and Splits

Financial Planning

The Management of Working Capital

International Finance

Filters

Exam 2: Financial Statements and Ratio Analysis

In common-size financial statements,

Using financial information to aid in decision making is called

Which of the following is one of the financial statements critical to financial statement analysis?

If net income was $10,000,interest expense was $4,000,and taxes were $1,000,what is the operating profit margin if sales were $50,000?

The ________ is a snapshot of the firm at a particular point in time.

Balance Sheet for year-ended Dec 31 ($000's) -Blockbuster Inc. Income Statement for year-ended Dec 31 ($000's) Referring to the Blockbuster financial statements,what is the change in ROE from Year 1 to Year 2? (ΔROE = - )

Years 1 & 2 ($000,000s) -Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Referring to the CFM Majestic financial statements,did ROE rise or fall from Year 1 to Year 2?

What is a firms times interest earned if it posts revenues of $200,000,taxes of $35,000,expenses of $100,000,and interest of $30,000

Balance sheets

In cross-sectional analysis,a firm's financial ratios are

What is a firm's debt ratio if its total assets are $135,000,equity is $75,000,current liabilities are $24,000,and total liabilities are $105,000?

Find accounts receivable turnover if a firm has an accounts receivable of $80,000,a total asset turnover of .75,and total assets of $230,000.

Years 1 & 2 ($000,000s) -Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Referring to the CFM Majestic financial statements,which is the bigger or more important determinant of the change in ROE?

Years 1 & 2 ($000,000s) -Income Statement CFM Majestic Inc. Years 1 & 2 ($000,000s) Referring to the CFM Majestic financial statements,What is Net Profit Margin in Year 1?

Find the return on assets if net income was $55,000,total assets are $115,000,EBIT was $100,000,and equity is $75,000.

An income statement contains all of the following EXCEPT

What is the current ratio if cash is $10,000,accounts receivable are $25,000,inventories are $30,000,accounts payable are $40,000,and accrued payroll is $15,000?

Overview of Finance

Time Value of Money - Introduction

Time Value of Money - Streams and Valuations

Risk and Return - Introduction

Portfolio Theory

Interest Rates and Bond Valuation

Stock Valuation and Market Efficiency

Capital Budgeting Techniques

Capital Budgeting - Cash Flows

Cost of Capital

Capital Structure

Dividends, repurchases, and Splits

Financial Planning

The Management of Working Capital

International Finance

Filters