Question 1

Earnings per share represents the dollar amount earned and distributed to shareholders.

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.
-Long-term debt for CEE in 2019 was ________.(See Table 3.1)

Accepted Answer

A) $30,763 
B) $52,372 
C) $10,608 
D) $41,372 
A) $30,763 
B) $52,372 
C) $10,608 
D) $41,372

Question 3

Which of the following represents a current asset?

Accepted Answer

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

Question 4

The use of differing accounting treatments-especially relative to inventory and depreciation-can distort the results of ratio analysis,regardless of whether cross-sectional or time-series analysis is used.

Accepted Answer

A) True 
 B)False

Question 5

Return on total assets (ROA)measures the overall effectiveness of management in generating profits with its available assets.

Accepted Answer

A) True 
 B)False

Question 6

The basic inputs to an effective financial analysis are the firm's income statement and the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

The Financial Accounting Standards Board (FASB)Standard No.52 mandates that U.S.-based companies translate their foreign-currency-denominated assets and liabilities into dollars using the current rate (translation)method.

Accepted Answer

A) True 
 B)False

Question 8

A firm's year-end retained earnings balances are $320,000 and $400,000,for 2018 and 2019,respectively.The firm reported net profits after taxes of $100,000 in 2019.The firm's dividend payment for 2019 is ________.

Accepted Answer

A) $0 
B) $20,000 
C) $80,000 
D) $100,000 
A) $0 
B) $20,000 
C) $80,000 
D) $100,000

Question 9

A U.S.parent company's foreign equity accounts are translated into dollars using the historical rate or average rate based on the company's discretion.

Accepted Answer

A) True 
 B)False

Question 10

The ________ is a popular approach for evaluating profitability in relation to sales by expressing each item on the income statement as a percent of sales.

Accepted Answer

A) retained earnings statement 
B) common-size balance sheet 
C) common-size income statement 
D) profit and loss statement 
A) retained earnings statement 
B) common-size balance sheet 
C) common-size income statement 
D) profit and loss statement

Question 11

The ________ ratio measures a firm's ability to pay contractual interest payments.

Accepted Answer

A) times interest earned 
B) fixed-payment coverage 
C) debt 
D) average payment period 
A) times interest earned 
B) fixed-payment coverage 
C) debt 
D) average payment period

Question 12

________ analysis involves comparison of current to past performance and the evaluation of developing trends.

Accepted Answer

A) Time-series 
B) Cross-sectional 
C) Marginal 
D) Break-even 
A) Time-series 
B) Cross-sectional 
C) Marginal 
D) Break-even

Question 13

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 14

For most companies we would expect the market/book ratio to be greater than 1.0.

Accepted Answer

A) True 
 B)False

Question 15

In the DuPont system of analysis,the return on equity is equal to ________.

Accepted Answer

A) (net profit margin)× (total asset turnover) 
B) (stockholders' equity)× (financial leverage multiplier) 
C) (return on total assets)× (financial leverage multiplier) 
D) (return on total assets)× (total asset turnover) 
A) (net profit margin)× (total asset turnover) 
B) (stockholders' equity)× (financial leverage multiplier) 
C) (return on total assets)× (financial leverage multiplier) 
D) (return on total assets)× (total asset turnover)

Question 16

Earnings per share results from dividing earnings available for common stockholders by the number of shares of common stock authorized.

Accepted Answer

A) True 
 B)False

Question 17

Time-series analysis is often used to ________.

Accepted Answer

A) assess developing trends 
B) correct errors of judgment 
C) evaluate the value of a firm or its assets 
D) standardize results 
A) assess developing trends 
B) correct errors of judgment 
C) evaluate the value of a firm or its assets 
D) standardize results

Question 18

Book value per share is the ratio of ________.

Accepted Answer

A) common stock equity to number of outstanding common shares 
B) retained earnings to number of outstanding common shares 
C) fixed assets to number of outstanding common shares 
D) total liabilities to number of outstanding common shares 
A) common stock equity to number of outstanding common shares 
B) retained earnings to number of outstanding common shares 
C) fixed assets to number of outstanding common shares 
D) total liabilities to number of outstanding common shares

Question 19

The stockholder's report includes ________.

Accepted Answer

A) an estimated interest cost report 
B) an estimated dividend report 
C) a break-even sales report 
D) a statement of retained earnings 
A) an estimated interest cost report 
B) an estimated dividend report 
C) a break-even sales report 
D) a statement of retained earnings

Question 20

Gross profit is ________.

Accepted Answer

A) operating profits minus depreciation 
B) operating profits minus cost of goods sold 
C) sales revenue minus operating expenses 
D) sales revenue minus cost of goods sold 
A) operating profits minus depreciation 
B) operating profits minus cost of goods sold 
C) sales revenue minus operating expenses 
D) sales revenue minus cost of goods sold

Earnings per share represents the dollar amount earned and distributed to shareholders.

Which of the following represents a current asset?

The use of differing accounting treatments-especially relative to inventory and depreciation-can distort the results of ratio analysis,regardless of whether cross-sectional or time-series analysis is used.

Return on total assets (ROA)measures the overall effectiveness of management in generating profits with its available assets.

The basic inputs to an effective financial analysis are the firm's income statement and the balance sheet.

The Financial Accounting Standards Board (FASB)Standard No.52 mandates that U.S.-based companies translate their foreign-currency-denominated assets and liabilities into dollars using the current rate (translation)method.

A firm's year-end retained earnings balances are $320,000 and $400,000,for 2018 and 2019,respectively.The firm reported net profits after taxes of $100,000 in 2019.The firm's dividend payment for 2019 is ________.

A U.S.parent company's foreign equity accounts are translated into dollars using the historical rate or average rate based on the company's discretion.

The ________ is a popular approach for evaluating profitability in relation to sales by expressing each item on the income statement as a percent of sales.

The ________ ratio measures a firm's ability to pay contractual interest payments.

________ analysis involves comparison of current to past performance and the evaluation of developing trends.

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

For most companies we would expect the market/book ratio to be greater than 1.0.

In the DuPont system of analysis,the return on equity is equal to ________.

Earnings per share results from dividing earnings available for common stockholders by the number of shares of common stock authorized.

Time-series analysis is often used to ________.

Book value per share is the ratio of ________.

The stockholder's report includes ________.

Gross profit is ________.

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

Earnings per share represents the dollar amount earned and distributed to shareholders.

Which of the following represents a current asset?

The use of differing accounting treatments-especially relative to inventory and depreciation-can distort the results of ratio analysis,regardless of whether cross-sectional or time-series analysis is used.

Return on total assets (ROA)measures the overall effectiveness of management in generating profits with its available assets.

The basic inputs to an effective financial analysis are the firm's income statement and the balance sheet.

The Financial Accounting Standards Board (FASB)Standard No.52 mandates that U.S.-based companies translate their foreign-currency-denominated assets and liabilities into dollars using the current rate (translation)method.

A firm's year-end retained earnings balances are $320,000 and $400,000,for 2018 and 2019,respectively.The firm reported net profits after taxes of $100,000 in 2019.The firm's dividend payment for 2019 is ________.

A U.S.parent company's foreign equity accounts are translated into dollars using the historical rate or average rate based on the company's discretion.

The ________ is a popular approach for evaluating profitability in relation to sales by expressing each item on the income statement as a percent of sales.

The ________ ratio measures a firm's ability to pay contractual interest payments.

________ analysis involves comparison of current to past performance and the evaluation of developing trends.

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

For most companies we would expect the market/book ratio to be greater than 1.0.

In the DuPont system of analysis,the return on equity is equal to ________.

Earnings per share results from dividing earnings available for common stockholders by the number of shares of common stock authorized.

Time-series analysis is often used to ________.

Book value per share is the ratio of ________.

The stockholder's report includes ________.

Gross profit is ________.

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