Question 1

The quick ratio is measured as:

Accepted Answer

A) current assets divided by current liabilities. 
B) cash on hand plus current liabilities,divided by current assets. 
C) current liabilities divided by current assets,plus inventory. 
D) current assets minus inventory,divided by current liabilities. 
E) current assets minus inventory minus current liabilities. 
A) current assets divided by current liabilities. 
B) cash on hand plus current liabilities,divided by current assets. 
C) current liabilities divided by current assets,plus inventory. 
D) current assets minus inventory,divided by current liabilities. 
E) current assets minus inventory minus current liabilities. D

Question 2

The _____ breaks down return on equity into three component parts.

Accepted Answer

A) Du Pont identity 
B) return on assets 
C) statement of cash flows 
D) asset turnover ratio 
E) equity multiplier 
A) Du Pont identity 
B) return on assets 
C) statement of cash flows 
D) asset turnover ratio 
E) equity multiplier A

Question 3

Growth can be reconciled with the goal of maximizing firm value:

Accepted Answer

A) because greater growth always adds to value. 
B) because growth must be an outcome of decisions that maximize NPV. 
C) because growth and wealth maximization are the same. 
D) because growth of any type cannot decrease value. 
E) None of the above. 
A) because greater growth always adds to value. 
B) because growth must be an outcome of decisions that maximize NPV. 
C) because growth and wealth maximization are the same. 
D) because growth of any type cannot decrease value. 
E) None of the above. B

Question 4

Which of the following are liquidity ratios?
I.cash coverage ratio
II.current ratio
III.quick ratio
IV.inventory turnover

Accepted Answer

A) II and III only 
B) I and II only 
C) II,III,and IV only 
D) I,III,and IV only 
E) I,II,III,and IV 
A) II and III only 
B) I and II only 
C) II,III,and IV only 
D) I,III,and IV only 
E) I,II,III,and IV

Question 5

BGL Enterprises increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the:

Accepted Answer

A) return on equity will increase. 
B) return on assets will decrease. 
C) profit margin will decline. 
D) equity multiplier will decrease. 
E) price-earnings ratio will increase. 
A) return on equity will increase. 
B) return on assets will decrease. 
C) profit margin will decline. 
D) equity multiplier will decrease. 
E) price-earnings ratio will increase.

Question 6

Which is a more meaningful measure of profitability for a firm,return on assets or return on equity? Why?

Accepted Answer

Most would argue ROE since it measures r

Question 7

What is the times interest earned ratio for 2011?

Accepted Answer

A) 30 
B) 36 
C) 40 
D) 50 
E) 54 
A) 30 
B) 36 
C) 40 
D) 50 
E) 54

Question 8

The inventory turnover ratio is measured as:

Accepted Answer

A) total sales minus inventory. 
B) inventory times total sales. 
C) cost of goods sold divided by inventory. 
D) inventory times cost of goods sold. 
E) inventory plus cost of goods sold. 
A) total sales minus inventory. 
B) inventory times total sales. 
C) cost of goods sold divided by inventory. 
D) inventory times cost of goods sold. 
E) inventory plus cost of goods sold.

Question 9

Which of the following represent problems encountered when comparing the financial statements of one firm with those of another firm?
I.Either one,or both,of the firms may be conglomerates and thus have unrelated lines of business.
II.The operations of the two firms may vary geographically.
III.The firms may use differing accounting methods for inventory purposes.
IV.The two firms may be seasonal in nature and have different fiscal year ends.

Accepted Answer

A) I and II only 
B) II and III only 
C) I,III,and IV only 
D) I,II,and III only 
E) I,II,III,and IV 
A) I and II only 
B) II and III only 
C) I,III,and IV only 
D) I,II,and III only 
E) I,II,III,and IV

Question 10

A supplier,who requires payment within ten days,is most concerned with which one of the following ratios when granting credit?

Accepted Answer

A) current 
B) cash 
C) debt-equity 
D) quick 
E) total debt 
A) current 
B) cash 
C) debt-equity 
D) quick 
E) total debt

Question 11

List and interpret two liquidity ratios.

Accepted Answer

Choose any two of the following:
1.Curre

Question 12

The sustainable growth rate:

Accepted Answer

A) assumes there is no external financing of any kind. 
B) is normally higher than the internal growth rate. 
C) assumes the debt-equity ratio is variable. 
D) is based on receiving additional external debt and equity financing. 
E) assumes that 100% of all income is retained by the firm. 
A) assumes there is no external financing of any kind. 
B) is normally higher than the internal growth rate. 
C) assumes the debt-equity ratio is variable. 
D) is based on receiving additional external debt and equity financing. 
E) assumes that 100% of all income is retained by the firm.

Question 13

Vinnie's Motors has a market-to-book ratio of 3.The book value per share is $4.00.Holding market-to-book constant,a $1 increase in the book value per share will:

Accepted Answer

A) cause the accountants to increase the equity of the firm by an additional $2. 
B) increase the market price per share by $1. 
C) increase the market price per share by $12. 
D) tend to cause the market price per share to rise. 
E) only affect book values but not market values. 
A) cause the accountants to increase the equity of the firm by an additional $2. 
B) increase the market price per share by $1. 
C) increase the market price per share by $12. 
D) tend to cause the market price per share to rise. 
E) only affect book values but not market values.

Question 14

Mario's Home Systems has sales of $2,800,cost of goods sold of $2,100,inventory of $600,and accounts receivable of $600.How many days,on average,does it take Mario's to sell its inventory?

Accepted Answer

A) 42.10 days 
B) 66.37 days 
C) 78.21 days 
D) 104.29 days 
E) 273.75 days 
A) 42.10 days 
B) 66.37 days 
C) 78.21 days 
D) 104.29 days 
E) 273.75 days

Question 15

If shareholders want to know how much profit a firm is making on their entire investment in the firm,the shareholders should look at the:

Accepted Answer

A) profit margin. 
B) return on assets. 
C) return on equity. 
D) equity multiplier. 
E) earnings per share. 
A) profit margin. 
B) return on assets. 
C) return on equity. 
D) equity multiplier. 
E) earnings per share.

Question 16

What is the return on equity for 2011?

Accepted Answer

A) 5.7% 
B) 6.8% 
C) 13.0% 
D) 15.3% 
E) 16.0% 
A) 5.7% 
B) 6.8% 
C) 13.0% 
D) 15.3% 
E) 16.0%

Question 17

One of the primary weaknesses of many financial planning models is that they:

Accepted Answer

A) rely too much on financial relationships and too little on accounting relationships. 
B) are iterative in nature. 
C) ignore the goals and objectives of senior management. 
D) are based solely on best case assumptions. 
E) ignore the size,risk,and timing of cash flows. 
A) rely too much on financial relationships and too little on accounting relationships. 
B) are iterative in nature. 
C) ignore the goals and objectives of senior management. 
D) are based solely on best case assumptions. 
E) ignore the size,risk,and timing of cash flows.

Question 18

The Green Giant has a 5% profit margin and a 40% dividend payout ratio.The total asset turnover is 1.40 and the equity multiplier is 1.50.What is the sustainable rate of growth?

Accepted Answer

A) 6.30% 
B) 6.53% 
C) 6.72% 
D) 6.80% 
E) 6.83% 
A) 6.30% 
B) 6.53% 
C) 6.72% 
D) 6.80% 
E) 6.83%

Question 19

Catherine's Consulting has a net income of $ 1,400 and a total equity of $ 12,000.The debt-equity ratio is 1.0 and the plowback is 30%.What is the return on assets?

Accepted Answer

A) 4.24% 
B) 4.64% 
C) 5.23% 
D) 5.83% 
E) None of the above 
A) 4.24% 
B) 4.64% 
C) 5.23% 
D) 5.83% 
E) None of the above

Question 20

One key reason a long-term financial plan is developed is because:

Accepted Answer

A) the plan determines your financial policy. 
B) the plan determines your investment policy. 
C) there are direct connections between achievable corporate growth and the financial policy. 
D) there is unlimited growth possible in a well-developed financial plan. 
E) None of the above. 
A) the plan determines your financial policy. 
B) the plan determines your investment policy. 
C) there are direct connections between achievable corporate growth and the financial policy. 
D) there is unlimited growth possible in a well-developed financial plan. 
E) None of the above.

The quick ratio is measured as:

The _____ breaks down return on equity into three component parts.

Growth can be reconciled with the goal of maximizing firm value:

Which of the following are liquidity ratios? I.cash coverage ratio II.current ratio III.quick ratio IV.inventory turnover

BGL Enterprises increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the:

Which is a more meaningful measure of profitability for a firm,return on assets or return on equity? Why?

What is the times interest earned ratio for 2011?

The inventory turnover ratio is measured as:

A supplier,who requires payment within ten days,is most concerned with which one of the following ratios when granting credit?

List and interpret two liquidity ratios.

The sustainable growth rate:

Vinnie's Motors has a market-to-book ratio of 3.The book value per share is $4.00.Holding market-to-book constant,a $1 increase in the book value per share will:

Mario's Home Systems has sales of $2,800,cost of goods sold of $2,100,inventory of $600,and accounts receivable of $600.How many days,on average,does it take Mario's to sell its inventory?

If shareholders want to know how much profit a firm is making on their entire investment in the firm,the shareholders should look at the:

What is the return on equity for 2011?

One of the primary weaknesses of many financial planning models is that they:

The Green Giant has a 5% profit margin and a 40% dividend payout ratio.The total asset turnover is 1.40 and the equity multiplier is 1.50.What is the sustainable rate of growth?

Catherine's Consulting has a net income of $ 1,400 and a total equity of $ 12,000.The debt-equity ratio is 1.0 and the plowback is 30%.What is the return on assets?

One key reason a long-term financial plan is developed is because:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

Filters

Exam 3: Financial Statements Analysis and Long-Term Planning

The quick ratio is measured as:

The _____ breaks down return on equity into three component parts.

Growth can be reconciled with the goal of maximizing firm value:

Which of the following are liquidity ratios? I.cash coverage ratio II.current ratio III.quick ratio IV.inventory turnover

BGL Enterprises increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the:

Which is a more meaningful measure of profitability for a firm,return on assets or return on equity? Why?

What is the times interest earned ratio for 2011?

The inventory turnover ratio is measured as:

A supplier,who requires payment within ten days,is most concerned with which one of the following ratios when granting credit?

List and interpret two liquidity ratios.

The sustainable growth rate:

Vinnie's Motors has a market-to-book ratio of 3.The book value per share is $4.00.Holding market-to-book constant,a $1 increase in the book value per share will:

Mario's Home Systems has sales of $2,800,cost of goods sold of $2,100,inventory of $600,and accounts receivable of $600.How many days,on average,does it take Mario's to sell its inventory?

If shareholders want to know how much profit a firm is making on their entire investment in the firm,the shareholders should look at the:

What is the return on equity for 2011?

One of the primary weaknesses of many financial planning models is that they:

The Green Giant has a 5% profit margin and a 40% dividend payout ratio.The total asset turnover is 1.40 and the equity multiplier is 1.50.What is the sustainable rate of growth?

Catherine's Consulting has a net income of $ 1,400 and a total equity of $ 12,000.The debt-equity ratio is 1.0 and the plowback is 30%.What is the return on assets?

One key reason a long-term financial plan is developed is because:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

Filters