Exam 5: Evaluating Operating and Financial Performance

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 current ratio for Runs and Goses?

A venture's cash,marketable securities,and receivables comprise the venture's "liquid assets".

Leverage ratios indicate the extent to which the venture has used debt and its ability to meet debt obligations.

The term "cash build" is measured as:

During the development and startup stages of a venture's life cycle,important users of financial ratios and measures include the entrepreneur,business angels,and venture capitalists (VCs).

"Net working capital" is calculated as fixed assets minus current liabilities.

The equity multiplier is considered an efficiency ratio.

Accounting rules require that the current maturities of long-term debt obligations be classified as short-term liabilities.

The part of a venture's interest payment that is subsidized by the government because of the deductibility of interest is called the interest tax shield.

The difference between a venture's ability to generate cash to pay interest and the amount of interest it has to pay is determined by which of the following ratios?

Which of the following is true?

Net working capital is a dollar amount measure of the cushion between current assets and current liabilities.

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 interest coverage ratio for Runs and Goses is:

A venture has net sales of $400,000,cost of goods sold of $200,000,operating expenses (selling,general,and administrative)of $100,000,and interest expenses of $50,000.What is the operating profit margin?

Showing the relationships between two or more financial variable and/or time,financial ratios are useful means of summarizing large amounts of financial data for comparative purposes.

Commercial banks are important users of financial ratios and measures during the development and startup stages of ventures.

Which of the following is not a profitability and efficiency ratio?

Dividing the average total assets by the average owners' equity is called which of the following 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. -The gross profit margin for Runs and Goses is?

Liquidity ratios indicate the venture's ability to pay short term assets from short-term liabilities.