Exam 5: Evaluating Operating and Financial Performance

The current ratio and the quick ratio differ only because average inventories are subtracted in the numerator of the quick ratio.

During the development and startup stages of a venture's life cycle,important financial ratios and measures include cash burn rates and liquidity ratios.

Investment bankers and commercial banks are important users of financial ratios and measures during which of the following life cycle stages?

The extent to which a venture is in debt and in its ability to repay its debt obligations is indicated by leverage ratios.

In its closing financial statements for its first year in business, the Runs and Goses Company, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of$3,408, accounts payable of $700, short-term notes payable of $740, long-term liabilities of $1,100, common stock of $1,160, retained earnings of$1,620, net sales of $2,768, cost of goods sold of $1,210, depreciation of $360, interest expense of $160, taxes of $312, addition to retained earnings of $508, and dividends paid of $218. -What is the net profit margin for Runs and Goses?

In its closing financial statements for its first year in business, the Runs and Goses Company, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of$3,408, accounts payable of $700, short-term notes payable of $740, long-term liabilities of $1,100, common stock of $1,160, retained earnings of$1,620, net sales of $2,768, cost of goods sold of $1,210, depreciation of $360, interest expense of $160, taxes of $312, addition to retained earnings of $508, and dividends paid of $218. -The total-debt-total-asset ratio for Runs and Goses is?

If a firm has positive net income,a drop in a venture's asset intensity ratio will increase its ROE.

Profitability and efficiency ratios are generally considered to be more important during the development and startup stages compared to the survival and rapid-growth stages.

Trend analysis is used to examine a venture's performance over time.

Use the following information to determine a firm's "cash build:" net sales = $150,000; net income = $15,000; beginning-of-period accounts receivable = $60,000; end-of-period accounts receivable = $90,000; and interest = $10,000.

In its closing financial statements for its first year in business, the Runs and Goses Company, had cash of $242, accounts receivable of $850, inventory of $820, net fixed assets of$3,408, accounts payable of $700, short-term notes payable of $740, long-term liabilities of $1,100, common stock of $1,160, retained earnings of$1,620, net sales of $2,768, cost of goods sold of $1,210, depreciation of $360, interest expense of $160, taxes of $312, addition to retained earnings of $508, and dividends paid of $218. -What is Runs and Goses' return on total assets?

Last year,Nemo's Fish 'n Chips recorded the following financial data: sales = $85,000; cost of goods sold = $45,000; selling and administrative expenses = $25,000; depreciation and amortization = $7,000; interest expense = $12,000.The tax rate was 30%.Find Nemo's interest coverage for last year.

Last year,Lenny's Lemonade had $3,500 in sales,and cost of goods sold was $2,000.Depreciation expenses totaled $500 and interest expense was $700.If the tax rate is 25%,what is the net profit margin for Lenny's Lemonade? What is its NOPAT margin?

Cross-sectional analysis is used to examine a venture's performance over time.

For a venture with inventories,the quick ratio will always be greater than the current ratio.

Second-round,mezzanine,and liquidity-stage financing generally occur during a venture's survival stage.

How efficiently a venture controls its expenses and uses its assets and debt is evaluated with profitability and efficiency ratios.

The term "cash build" as used in Chapter 5 is equal to net sales minus the change in receivables.

Which of the following is used to compare a venture's performance against another firm at the same point in time?

A firm has the following balance sheet information: total assets = $100,000; current assets = $30,000; inventories = $10,000; cash = $5,000; total liabilities = $30,000; current liabilities = $15,000; notes payable = $2,000.What are the firm's quick and NWC-to-Total-Assets ratios?