Question 1

The less fixed-cost debt (financial leverage)a firm uses,the greater will be its risk and return.

Accepted Answer

A) True 
 B)False

Question 2

Table 3.1   Information (2019 values)
1.Sales totaled $110,000
2.The gross profit margin was 25 percent.
3.Inventory turnover was 3.0.
4.There are 360 days in the year.
5.The average collection period was 65 days.
6.The current ratio was 2.40.
7.The total asset turnover was 1.13.
8.The debt ratio was 53.8 percent.
-Accounts receivable for CEE in 2019 was ________.(See Table 3.1)

Accepted Answer

A) $14,056 
B) $19,861 
C) $14,895 
D) $18,333 
A) $14,056 
B) $19,861 
C) $14,895 
D) $18,333

Question 3

A firm's P/E ratio tends to be higher if ________.

Accepted Answer

A) its risk and its growth prospects are lower 
B) its risk is higher and its growth prospects are lower 
C) its risk and its growth prospects are higher 
D) its risk is lower and its growth prospects are higher 
A) its risk and its growth prospects are lower 
B) its risk is higher and its growth prospects are lower 
C) its risk and its growth prospects are higher 
D) its risk is lower and its growth prospects are higher

Question 4

Ratios merely direct an analyst to potential areas of concern and it does not provide conclusive evidence as to the existence of a problem.

Accepted Answer

A) True 
 B)False

Question 5

The ________ measures the percentage of profit earned on each sales dollar before interest and taxes but after all costs and expenses.

Accepted Answer

A) net profit margin 
B) operating profit margin 
C) gross profit margin 
D) earnings available to common shareholders 
A) net profit margin 
B) operating profit margin 
C) gross profit margin 
D) earnings available to common shareholders

Question 6

The federal regulatory body governing the sale and listing of securities is called the ________.

Accepted Answer

A) IRS 
B) FASB 
C) GAAP 
D) SEC 
A) IRS 
B) FASB 
C) GAAP 
D) SEC

Question 7

Discuss the limitations of ratio analysis and the cautions which must be taken when reviewing a cross-sectional and time-series analysis.

Accepted Answer

In summarizing a large number of ratios,

Question 8

The ________ measures the activity,or liquidity,of a firm's stock of goods.

Accepted Answer

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

Question 9

Operating profit is ________.

Accepted Answer

A) gross profit minus operating expenses 
B) sales revenue minus cost of goods sold 
C) earnings before depreciation and taxes 
D) sales revenue minus depreciation expense 
A) gross profit minus operating expenses 
B) sales revenue minus cost of goods sold 
C) earnings before depreciation and taxes 
D) sales revenue minus depreciation expense

Question 10

The ________ indicates the percentage of each sales dollar remaining after the firm has paid for its goods.

Accepted Answer

A) net profit margin 
B) operating profit margin 
C) gross profit margin 
D) earnings available to common shareholders 
A) net profit margin 
B) operating profit margin 
C) gross profit margin 
D) earnings available to common shareholders

Question 11

In early 2018,Facebook's market/book ratio was close to 7.0.A market/book ratio that much greater than 1.0 for Facebook means that ________.

Accepted Answer

A) Facebook has a huge number of common shares outstanding 
B) the book value of Facebook's equity is far less than the total market value of the company's stock 
C) Facebook's stock is overvalued 
D) Facebook's book value is inflated because so many of its assets are intangible 
A) Facebook has a huge number of common shares outstanding 
B) the book value of Facebook's equity is far less than the total market value of the company's stock 
C) Facebook's stock is overvalued 
D) Facebook's book value is inflated because so many of its assets are intangible

Question 12

Cross-sectional analysis involves the comparison of different firms' financial ratios at the same point in time.

Accepted Answer

A) True 
 B)False

Question 13

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 14

Net fixed assets represent the difference between gross fixed assets and the amount of depreciation expense from the most recent year.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following groups of ratios primarily measure risk?

Accepted Answer

A) liquidity,activity,and profitability 
B) liquidity,profitability,and market 
C) liquidity,activity,and debt 
D) activity,debt,and profitability 
A) liquidity,activity,and profitability 
B) liquidity,profitability,and market 
C) liquidity,activity,and debt 
D) activity,debt,and profitability

Question 16

In general,the more debt a firm uses,the smaller its financial leverage.

Accepted Answer

A) True 
 B)False

Question 17

In 2017,Apple Inc.reported sales of $229.2 billion,cost of goods sold of $141 billion,and net income of $48.4 billion.Apple's gross profit margin that year was ________.

Accepted Answer

A) 38.4% 
B) 21.1% 
C) 61.5% 
D) 17.4% 
A) 38.4% 
B) 21.1% 
C) 61.5% 
D) 17.4%

Question 18

According to the basic DuPont equation,a firm's ROA is the product of what other two ratios?

Accepted Answer

A) net profit margin and return on equity 
B) net profit margin and total asset turnover 
C) net profit margin and the financial leverage multiplier 
D) ROE and the financial leverage multiplier 
A) net profit margin and return on equity 
B) net profit margin and total asset turnover 
C) net profit margin and the financial leverage multiplier 
D) ROE and the financial leverage multiplier

Question 19

The higher the value of the times interest earned ratio,the higher is the proportion of the firm's interest income compared to its contractual interest payments.

Accepted Answer

A) True 
 B)False

Question 20

Table 3.2
Dana Dairy Products Key Ratios   Income Statement
Dana Dairy Products
For the Year Ended December 31,2019   Balance Sheet
Dana Dairy Products
December 31,2019  
-The gross profit margin and net profit margin for Dana Dairy Products in 2019 were ________.(See Table 3.2)

Accepted Answer

A) 13 percent and 0.9 percent,respectively 
B) 13 percent and 1.5 percent,respectively 
C) 2 percent and 0.9 percent,respectively 
D) 2 percent and 1.5 percent,respectively 
A) 13 percent and 0.9 percent,respectively 
B) 13 percent and 1.5 percent,respectively 
C) 2 percent and 0.9 percent,respectively 
D) 2 percent and 1.5 percent,respectively

The less fixed-cost debt (financial leverage)a firm uses,the greater will be its risk and return.

A firm's P/E ratio tends to be higher if ________.

Ratios merely direct an analyst to potential areas of concern and it does not provide conclusive evidence as to the existence of a problem.

The ________ measures the percentage of profit earned on each sales dollar before interest and taxes but after all costs and expenses.

The federal regulatory body governing the sale and listing of securities is called the ________.

Discuss the limitations of ratio analysis and the cautions which must be taken when reviewing a cross-sectional and time-series analysis.

The ________ measures the activity,or liquidity,of a firm's stock of goods.

Operating profit is ________.

The ________ indicates the percentage of each sales dollar remaining after the firm has paid for its goods.

In early 2018,Facebook's market/book ratio was close to 7.0.A market/book ratio that much greater than 1.0 for Facebook means that ________.

Cross-sectional analysis involves the comparison of different firms' financial ratios at the same point in time.

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

Net fixed assets represent the difference between gross fixed assets and the amount of depreciation expense from the most recent year.

Which of the following groups of ratios primarily measure risk?

In general,the more debt a firm uses,the smaller its financial leverage.

In 2017,Apple Inc.reported sales of $229.2 billion,cost of goods sold of $141 billion,and net income of $48.4 billion.Apple's gross profit margin that year was ________.

According to the basic DuPont equation,a firm's ROA is the product of what other two ratios?

The higher the value of the times interest earned ratio,the higher is the proportion of the firm's interest income compared to its contractual interest payments.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31,2019 Balance Sheet Dana Dairy Products December 31,2019 -The gross profit margin and net profit margin for Dana Dairy Products in 2019 were ________.(See Table 3.2)

The Role of Managerial Finance

The Financial Market Environment

Long- and Short-Term 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 and Risk Refinements

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Filters

Exam 3: Financial Statements and Ratio Analysis

The less fixed-cost debt (financial leverage)a firm uses,the greater will be its risk and return.

A firm's P/E ratio tends to be higher if ________.

Ratios merely direct an analyst to potential areas of concern and it does not provide conclusive evidence as to the existence of a problem.

The ________ measures the percentage of profit earned on each sales dollar before interest and taxes but after all costs and expenses.

The federal regulatory body governing the sale and listing of securities is called the ________.

Discuss the limitations of ratio analysis and the cautions which must be taken when reviewing a cross-sectional and time-series analysis.

The ________ measures the activity,or liquidity,of a firm's stock of goods.

Operating profit is ________.

The ________ indicates the percentage of each sales dollar remaining after the firm has paid for its goods.

In early 2018,Facebook's market/book ratio was close to 7.0.A market/book ratio that much greater than 1.0 for Facebook means that ________.

Cross-sectional analysis involves the comparison of different firms' financial ratios at the same point in time.

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

Net fixed assets represent the difference between gross fixed assets and the amount of depreciation expense from the most recent year.

Which of the following groups of ratios primarily measure risk?

In general,the more debt a firm uses,the smaller its financial leverage.

In 2017,Apple Inc.reported sales of $229.2 billion,cost of goods sold of $141 billion,and net income of $48.4 billion.Apple's gross profit margin that year was ________.

According to the basic DuPont equation,a firm's ROA is the product of what other two ratios?

The higher the value of the times interest earned ratio,the higher is the proportion of the firm's interest income compared to its contractual interest payments.

Table 3.2 Dana Dairy Products Key Ratios Income Statement Dana Dairy Products For the Year Ended December 31,2019 Balance Sheet Dana Dairy Products December 31,2019 -The gross profit margin and net profit margin for Dana Dairy Products in 2019 were ________.(See Table 3.2)

The Role of Managerial Finance

The Financial Market Environment

Long- and Short-Term 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 and Risk Refinements

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Filters