Question 1

If a company has good growth potential,the market to book ratio should be:

Accepted Answer

A)  Higher than 1 
B)  Lower than 1 
C)  Less than 0 
D)  Not relevant 
A)  Higher than 1 
B)  Lower than 1 
C)  Less than 0 
D)  Not relevant

Question 2

To produce chewing gum,DryFruit Gum Company pays $100,000 per year for rent on a long-term lease and $25 per kilogram for sorbitol and other ingredients.The firm pays zero taxes.These are the only costs associated with making DryFruit Gum.During the year,the firm sells 30,000 kilograms of chewing gum at $45 per kilogram.The break-even point for DryFruit is closest to:

Accepted Answer

A)  225,000 kilograms 
B)  40,000 kilograms 
C)  5,000 kilograms 
D)  60,000 kilograms 
A)  225,000 kilograms 
B)  40,000 kilograms 
C)  5,000 kilograms 
D)  60,000 kilograms

Question 3

.Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or amortization expenses),
   
The break-even point for Widget Company is:

Accepted Answer

A)  64,286 units 
B)  107,135 units 
C)  117,857 units 
D)  500,000 units 
A)  64,286 units 
B)  107,135 units 
C)  117,857 units 
D)  500,000 units

Question 4

Which of the following is a productivity ratio?

Accepted Answer

A)  Times interest earned 
B)  Leverage 
C)  Inventory turnover 
D)  Current ratio 
A)  Times interest earned 
B)  Leverage 
C)  Inventory turnover 
D)  Current ratio

Question 5

UUP Inc.is very conservatively managed and nothing ever changes - their sales are constant over time,the collection periods stay the same,and the firm has not invested in any new assets.An investor is puzzled - she has found the fixed asset turnover rate is changing over time.How can the apparent efficiency with which the firm uses its assets be changing if all other items aren't changing?

Accepted Answer

A)  This observation is impossible; she must have miscalculated something. 
B)  This observation is possible; the fixed asset turnover must increase in this case due to depreciation. 
C)  This observation is possible; the fixed asset turnover must decrease in this case due to depreciation. 
D)  This observation is possible; she should look at net income and not sales - it is a better measure of the firm's efficiency and productivity. 
A)  This observation is impossible; she must have miscalculated something. 
B)  This observation is possible; the fixed asset turnover must increase in this case due to depreciation. 
C)  This observation is possible; the fixed asset turnover must decrease in this case due to depreciation. 
D)  This observation is possible; she should look at net income and not sales - it is a better measure of the firm's efficiency and productivity.

Question 6

Which of the following is TRUE?

Accepted Answer

A)  Interest expenses can be predicted with a reasonable degree of accuracy, especially when the firm uses fixed interest rates on debt. 
B)  Interest expenses are commonly based on a percentage of sales. 
C)  Depreciation costs are commonly based on a percentage of sales. 
D)  Forecasting sales is the last step in financial forecasting. 
A)  Interest expenses can be predicted with a reasonable degree of accuracy, especially when the firm uses fixed interest rates on debt. 
B)  Interest expenses are commonly based on a percentage of sales. 
C)  Depreciation costs are commonly based on a percentage of sales. 
D)  Forecasting sales is the last step in financial forecasting.

Question 7

When using a percent of sales method for forecasting,which is the most important variable to estimate?

Accepted Answer

A)  COGS 
B)  Inventory 
C)  Revenue 
D)  Bank debt 
A)  COGS 
B)  Inventory 
C)  Revenue 
D)  Bank debt

Question 8

Charles invested $3 million in the bonds of Toys & Tots Company eight years ago.Recent recalls of the toys produced by Toys & Tots has Charles worried about whether he will receive his annual interest cheque from the firm.Which ratio(s)will most directly address Charles' concern?

Accepted Answer

A)  I only 
B)  I and II only 
C)  III only 
D)  II and III only
I.Debt / asset
II.Debt / equity
III.Times interest earned 
A)  I only 
B)  I and II only 
C)  III only 
D)  II and III only
I.Debt / asset
II.Debt / equity
III.Times interest earned

Question 9

What is a pure financial ratio?

Accepted Answer

A)  A financial ratio that does not include non-cash items 
B)  A financial ratio for the same year 
C)  A financial ratio that involves items from the same financial statement 
D)  A financial ratio using the same GAAP 
A)  A financial ratio that does not include non-cash items 
B)  A financial ratio for the same year 
C)  A financial ratio that involves items from the same financial statement 
D)  A financial ratio using the same GAAP

Question 10

Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or amortization expenses),
   
The gross profit margin and operating margin for Widget Company are closest to:

Accepted Answer

A)  GPM = 26.67%; OM = 17.78% 
B)  GPM = 17.78%; OM = 26.67% 
C)  GPM = 53.33%; OM = 14.44% 
D)  GPM = 14.44%; OM = 53.33% 
A)  GPM = 26.67%; OM = 17.78% 
B)  GPM = 17.78%; OM = 26.67% 
C)  GPM = 53.33%; OM = 14.44% 
D)  GPM = 14.44%; OM = 53.33%

Question 11

The external financing requirements of a firm are a function of:

Accepted Answer

A)  Sales growth 
B)  Retention ratio 
C)  Profit margins 
D)  All of the above 
A)  Sales growth 
B)  Retention ratio 
C)  Profit margins 
D)  All of the above

Question 12

In 2015,Voyage Company had earnings per share of $45 and paid a dividend of $15 per share.The dividend yield was 8%.The book value per share is $100.The dividend payout ratio was:

Accepted Answer

A)  4.167 
B)  3.0000 
C)  0.3333 
D)  0.1500 
A)  4.167 
B)  3.0000 
C)  0.3333 
D)  0.1500

Question 13

What is the difference between a liquidity ratio and a leverage ratio?

Accepted Answer

A)  Liquidity ratios do not include debt while leverage ratios include debt. 
B)  Liquidity has a short-term focus while leverage has a long-term focus. 
C)  Liquidity ratios use balance sheet accounts while leverage ratios use the income statement. 
D)  There is no difference. 
A)  Liquidity ratios do not include debt while leverage ratios include debt. 
B)  Liquidity has a short-term focus while leverage has a long-term focus. 
C)  Liquidity ratios use balance sheet accounts while leverage ratios use the income statement. 
D)  There is no difference.

If a company has good growth potential,the market to book ratio should be:

.Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or amortization expenses), The break-even point for Widget Company is:

Which of the following is a productivity ratio?

Which of the following is TRUE?

When using a percent of sales method for forecasting,which is the most important variable to estimate?

Charles invested $3 million in the bonds of Toys & Tots Company eight years ago.Recent recalls of the toys produced by Toys & Tots has Charles worried about whether he will receive his annual interest cheque from the firm.Which ratio(s)will most directly address Charles' concern?

What is a pure financial ratio?

Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or amortization expenses), The gross profit margin and operating margin for Widget Company are closest to:

The external financing requirements of a firm are a function of:

In 2015,Voyage Company had earnings per share of $45 and paid a dividend of $15 per share.The dividend yield was 8%.The book value per share is $100.The dividend payout ratio was:

What is the difference between a liquidity ratio and a leverage ratio?

An Introduction to Finance

Business Corporatefinance

Financial Statements

Time Value of Money

Bond Valuation and Interest Rates

Equity Valuation

Risk, return, and Portfolio Theory

The Capital Asset Pricing Model Capm

Market Efficiency

Forwards,futures,and Swaps

Options

Capital Budgeting, risk Considerations, and Other Special Issues

Cash Flow Estimation and Capital Budgeting Decisions

Mergers and Acquisitions

Leasing

Investment Banking and Securities Law

Debt Instruments

Equity and Hybrid Instruments

Cost of Capital

Capital Structure Decisions

Dividend Policy

Working Capital Management: General Issues

Working Capital Management: Current Assets and Current Liabilities

Filters

Exam 4: Financial Statement Analysis and Forecasting

If a company has good growth potential,the market to book ratio should be:

.Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or amortization expenses), The break-even point for Widget Company is:

Which of the following is a productivity ratio?

Which of the following is TRUE?

When using a percent of sales method for forecasting,which is the most important variable to estimate?

Charles invested $3 million in the bonds of Toys & Tots Company eight years ago.Recent recalls of the toys produced by Toys & Tots has Charles worried about whether he will receive his annual interest cheque from the firm.Which ratio(s)will most directly address Charles' concern?

What is a pure financial ratio?

Given the following information extracted from the income statement of Widget Company ( Widget Company has no depreciation or amortization expenses), The gross profit margin and operating margin for Widget Company are closest to:

The external financing requirements of a firm are a function of:

In 2015,Voyage Company had earnings per share of $45 and paid a dividend of $15 per share.The dividend yield was 8%.The book value per share is $100.The dividend payout ratio was:

What is the difference between a liquidity ratio and a leverage ratio?

An Introduction to Finance

Business Corporatefinance

Financial Statements

Time Value of Money

Bond Valuation and Interest Rates

Equity Valuation

Risk, return, and Portfolio Theory

The Capital Asset Pricing Model Capm

Market Efficiency

Forwards,futures,and Swaps

Options

Capital Budgeting, risk Considerations, and Other Special Issues

Cash Flow Estimation and Capital Budgeting Decisions

Mergers and Acquisitions

Leasing

Investment Banking and Securities Law

Debt Instruments

Equity and Hybrid Instruments

Cost of Capital

Capital Structure Decisions

Dividend Policy

Working Capital Management: General Issues

Working Capital Management: Current Assets and Current Liabilities

Filters