Question 1

The average age of inventory can be calculated as 365 divided by inventory turnover.

Accepted Answer

A) True 
 B)False

Question 2

________ are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

Accepted Answer

A)  Customers 
B)  Stockholders 
C)  Lenders and suppliers 
D)  Borrowers and buyers 
A)  Customers 
B)  Stockholders 
C)  Lenders and suppliers 
D)  Borrowers and buyers

Question 3

________ is a term used to describe the magnification of risk and return introduced through the use of fixed cost financing such as preferred stock and long-term debt.

Accepted Answer

A)  Financial leverage 
B)  Operating leverage 
C)  Fixed-payment coverage 
D)  The acid-test 
A)  Financial leverage 
B)  Operating leverage 
C)  Fixed-payment coverage 
D)  The acid-test

Question 4

The ________ ratios are primarily measures of return.

Accepted Answer

A)  liquidity 
B)  activity 
C)  debt 
D)  profitability 
A)  liquidity 
B)  activity 
C)  debt 
D)  profitability

Question 5

In ratio analysis, a comparison to a standard industry ratio is made to isolate ________ deviations from the norm.

Accepted Answer

A)  positive 
B)  negative 
C)  any 
D)  standard 
A)  positive 
B)  negative 
C)  any 
D)  standard

Question 6

The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days' sales in inventory.

Accepted Answer

A) True 
 B)False

Question 7

The modified DuPont formula relates the firm's return on total assets (ROA) to the

Accepted Answer

A)  return on equity (RO
E) . 
B)  financial leverage multiplier. 
C)  net profit margin. 
D)  total asset turnover. 
A)  return on equity (RO
E) . 
B)  financial leverage multiplier. 
C)  net profit margin. 
D)  total asset turnover.

Question 8

The three summary ratios basic to the DuPont system of analysis are

Accepted Answer

A)  net profit margin, total asset turnover, and return on investment. 
B)  net profit margin, total asset turnover, and return on equity. 
C)  net profit margin, total asset turnover, and equity multiplier. 
D)  net profit margin, financial leverage multiplier, and return on equity. 
A)  net profit margin, total asset turnover, and return on investment. 
B)  net profit margin, total asset turnover, and return on equity. 
C)  net profit margin, total asset turnover, and equity multiplier. 
D)  net profit margin, financial leverage multiplier, and return on equity.

Question 9

The par value of common stock is an arbitrarily assigned per share value used primarily for accounting purposes.

Accepted Answer

A) True 
 B)False

Question 10

The financial leverage multiplier is an indicator of how much ________ a corporation is utilizing.

Accepted Answer

A)  operating leverage 
B)  long-term debt 
C)  total debt 
D)  total assets 
A)  operating leverage 
B)  long-term debt 
C)  total debt 
D)  total assets

Question 11

ABC Corp. extends credit terms of 45 days to its customers. Its credit collection would likely be considered poor if its average collection period was

Accepted Answer

A)  30 days. 
B)  36 days. 
C)  47 days. 
D)  57 days. 
A)  30 days. 
B)  36 days. 
C)  47 days. 
D)  57 days.

Question 12

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31, 2010   Balance Sheet
Dana Dairy Products
December 31, 2010  
-The return on total assets for Dana Dairy Products for 2010 was ________. (See Table 3.2)

Accepted Answer

A)  0.9 percent 
B)  5.5 percent 
C)  25 percent 
D)  2.5 percent 
A)  0.9 percent 
B)  5.5 percent 
C)  25 percent 
D)  2.5 percent

Question 13

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31, 2010   Balance Sheet
Dana Dairy Products
December 31, 2010  
-If Dana Dairy Products has credit terms which specify that accounts receivable should be paid in 25 days, the average collection period ________ since 2009. (See Table 3.2)

Accepted Answer

A)  has deteriorated 
B)  remained the same 
C)  has improved 
D)  cannot be determined 
A)  has deteriorated 
B)  remained the same 
C)  has improved 
D)  cannot be determined

Question 14

The rule-setting body, which authorizes generally accepted accounting principles is

Accepted Answer

A)  GAAP. 
B)  FASB. 
C)  SEC. 
D)  Federal Reserve System. 
A)  GAAP. 
B)  FASB. 
C)  SEC. 
D)  Federal Reserve System.

Question 15

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31, 2010   Balance Sheet
Dana Dairy Products
December 31, 2010  
-The debt ratio for Dana Dairy Products in 2010 was ________.(See Table 3.2)

Accepted Answer

A)  50 percent 
B)  11 percent 
C)  55 percent 
D)  44 percent 
A)  50 percent 
B)  11 percent 
C)  55 percent 
D)  44 percent

Question 16

When assessing the fixed-payment coverage ratio,

Accepted Answer

A)  the lower its value the more risky is the firm. 
B)  the lower its value, the lower is the firm's financial leverage. 
C)  preferred stock dividend payments can be disregarded. 
D)  the higher its value, the higher is the firm's liquidity. 
A)  the lower its value the more risky is the firm. 
B)  the lower its value, the lower is the firm's financial leverage. 
C)  preferred stock dividend payments can be disregarded. 
D)  the higher its value, the higher is the firm's liquidity.

Question 17

All of the following are examples of fixed assets EXCEPT

Accepted Answer

A)  automobiles. 
B)  buildings. 
C)  marketable securities. 
D)  equipment. 
A)  automobiles. 
B)  buildings. 
C)  marketable securities. 
D)  equipment.

Question 18

Return on total assets (ROA) measures the overall effectiveness of management in generating profits with the owners' investment in the firm.

Accepted Answer

A) True 
 B)False

Question 19

The magnification of risk and return introduced through the use of fixed-cost financing such as debt and preferred stock is called financial leverage.

Accepted Answer

A) True 
 B)False

Question 20

The ________ is useful in evaluating credit and collection policies.

Accepted Answer

A)  average payment period 
B)  current ratio 
C)  average collection period 
D)  current asset turnover 
A)  average payment period 
B)  current ratio 
C)  average collection period 
D)  current asset turnover

The average age of inventory can be calculated as 365 divided by inventory turnover.

________ are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

________ is a term used to describe the magnification of risk and return introduced through the use of fixed cost financing such as preferred stock and long-term debt.

The ________ ratios are primarily measures of return.

In ratio analysis, a comparison to a standard industry ratio is made to isolate ________ deviations from the norm.

The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days' sales in inventory.

The modified DuPont formula relates the firm's return on total assets (ROA) to the

The three summary ratios basic to the DuPont system of analysis are

The par value of common stock is an arbitrarily assigned per share value used primarily for accounting purposes.

The financial leverage multiplier is an indicator of how much ________ a corporation is utilizing.

ABC Corp. extends credit terms of 45 days to its customers. Its credit collection would likely be considered poor if its average collection period was

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2010 Balance Sheet Dana Dairy Products December 31, 2010 -The return on total assets for Dana Dairy Products for 2010 was ________. (See Table 3.2)

The rule-setting body, which authorizes generally accepted accounting principles is

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2010 Balance Sheet Dana Dairy Products December 31, 2010 -The debt ratio for Dana Dairy Products in 2010 was ________.(See Table 3.2)

When assessing the fixed-payment coverage ratio,

All of the following are examples of fixed assets EXCEPT

Return on total assets (ROA) measures the overall effectiveness of management in generating profits with the owners' investment in the firm.

The magnification of risk and return introduced through the use of fixed-cost financing such as debt and preferred stock is called financial leverage.

The ________ is useful in evaluating credit and collection policies.

The Role of Managerial Finance

The Financial Market Environment

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Exam 3: Financial Statements and Ratio Analysis

The average age of inventory can be calculated as 365 divided by inventory turnover.

________ are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

________ is a term used to describe the magnification of risk and return introduced through the use of fixed cost financing such as preferred stock and long-term debt.

The ________ ratios are primarily measures of return.

In ratio analysis, a comparison to a standard industry ratio is made to isolate ________ deviations from the norm.

The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days' sales in inventory.

The modified DuPont formula relates the firm's return on total assets (ROA) to the

The three summary ratios basic to the DuPont system of analysis are

The par value of common stock is an arbitrarily assigned per share value used primarily for accounting purposes.

The financial leverage multiplier is an indicator of how much ________ a corporation is utilizing.

ABC Corp. extends credit terms of 45 days to its customers. Its credit collection would likely be considered poor if its average collection period was

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2010 Balance Sheet Dana Dairy Products December 31, 2010 -The return on total assets for Dana Dairy Products for 2010 was ________. (See Table 3.2)

The rule-setting body, which authorizes generally accepted accounting principles is

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31, 2010 Balance Sheet Dana Dairy Products December 31, 2010 -The debt ratio for Dana Dairy Products in 2010 was ________.(See Table 3.2)

When assessing the fixed-payment coverage ratio,

All of the following are examples of fixed assets EXCEPT

Return on total assets (ROA) measures the overall effectiveness of management in generating profits with the owners' investment in the firm.

The magnification of risk and return introduced through the use of fixed-cost financing such as debt and preferred stock is called financial leverage.

The ________ is useful in evaluating credit and collection policies.

The Role of Managerial Finance

The Financial Market Environment

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters