Question 1

Which is not one of the five ratio categories?

Accepted Answer

A)  Liquidity 
B)  Asset management 
C)  Retained earnings management 
D)  Profitability 
A)  Liquidity 
B)  Asset management 
C)  Retained earnings management 
D)  Profitability C

Question 2

Which business transaction will affect the quick ratio?

Accepted Answer

A)  Purchase a fixed asset with money borrowed long term 
B)  Liquidate a temporary investment and put the money in a checking account 
C)  Sell some inventory and use the cash immediately to buy a fixed asset 
D)  Make a payment to a vendor on an account payable 
A)  Purchase a fixed asset with money borrowed long term 
B)  Liquidate a temporary investment and put the money in a checking account 
C)  Sell some inventory and use the cash immediately to buy a fixed asset 
D)  Make a payment to a vendor on an account payable D

Question 3

The major types of financial ratios include all of the following except:

Accepted Answer

A)  activity. 
B)  liquidity. 
C)  financial leverage. 
D)  equity. 
A)  activity. 
B)  liquidity. 
C)  financial leverage. 
D)  equity. D

Question 4

Financing activities also include long-term purchases and sales of financial assets.

Accepted Answer

A) True 
 B)False

Question 5

A firm has current assets of $10,000 and current liabilities of $6,000. Cash and marketable securities total $4,000, the balance in accounts receivable is $2,000, and the book value of inventory is $4,000. The firm's net working capital is:

Accepted Answer

A)  $2,000. 
B)  $4,000. 
C)  $6,000. 
D)  $9,000. 
E)  None of the above 
A)  $2,000. 
B)  $4,000. 
C)  $6,000. 
D)  $9,000. 
E)  None of the above

Question 6

The Du Pont equations can be used to isolate problems.

Accepted Answer

A) True 
 B)False

Question 7

Liquidity Ratios measure the firm's ability to meet its short-term financial obligations.

Accepted Answer

A) True 
 B)False

Question 8

Depreciation is considered in which area of the Statement of Cash Flows?

Accepted Answer

A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  Income activities 
A)  Operating activities 
B)  Investing activities 
C)  Financing activities 
D)  Income activities

Question 9

Which of the following actions will improve the current ratio?

Accepted Answer

A)  Take a nine-month loan from the bank to pay off some of its suppliers 
B)  Accelerate the collection of accounts receivable 
C)  Sell off some old equipment 
D)  All of the above 
A)  Take a nine-month loan from the bank to pay off some of its suppliers 
B)  Accelerate the collection of accounts receivable 
C)  Sell off some old equipment 
D)  All of the above

Question 10

A firm with an equity multiplier of 4.0, will have a debt ratio of:

Accepted Answer

A)  .25. 
B)  1.00. 
C)  .75. 
D)  4.00. 
A)  .25. 
B)  1.00. 
C)  .75. 
D)  4.00.

Question 11

What is the return on assets (ROA) for a firm that has a debt ratio of 0.65, a return on sales of 6.5%, sales of $740,000, and a total asset turnover of 4?

Accepted Answer

A)  26.0% 
B)  16.9% 
C)  6.5% 
D)  None of the above 
A)  26.0% 
B)  16.9% 
C)  6.5% 
D)  None of the above

Question 12

Annual reports are in a sense, evaluations of management's performance but since they are prepared by management they are likely to:

Accepted Answer

A)  exclude the details of management discussion and analysis. 
B)  portray the firm's past performance in a most favorable light. 
C)  give the shareholders the opportunity to objectively evaluate management's day-to-day performance during the past year. 
D)  exclude the details of the minority interests groups. 
A)  exclude the details of management discussion and analysis. 
B)  portray the firm's past performance in a most favorable light. 
C)  give the shareholders the opportunity to objectively evaluate management's day-to-day performance during the past year. 
D)  exclude the details of the minority interests groups.

Question 13

A low turnover figure can mean some old inventory is on the books that isn't being used.

Accepted Answer

A) True 
 B)False

Question 14

A firm has current liabilities of $200,000, long term debt of $500,000, and equity of $1,200,000. Its debt ratio is_____.

Accepted Answer

A)  0.37 
B)  0.24 
C)  0.42 
D)  0.64 
A)  0.37 
B)  0.24 
C)  0.42 
D)  0.64

Question 15

Explain the different types of activities presented in the statement of cash flows.

Accepted Answer

A business's statement of cash flows is

Question 16

The ultimate test of a firm's efficient use of its stockholders money is its return on equity.

Accepted Answer

A) True 
 B)False

Question 17

A high inventory turnover ratio would be important to a company whose product has a high level of spoilage.

Accepted Answer

A) True 
 B)False

Question 18

In two successive years, it is possible for a firm to have identical profit and maintain identical levels of assets, but have different return on equity.

Accepted Answer

A) True 
 B)False

Question 19

Baker Corporation conducted the following activities during 2001: (1) they sold 10,000 shares of their own stock for $20.00 per share; (2) they issued bonds for which they received $500,000; (3) they paid dividends to their stockholders totaling $85,000; (4) they sold a piece of equipment for $50,000 that they were carrying on their books for $20,000; (5) they earned net income of $140,000. What would be shown on the Statement of Cash Flows for "cash from financing activities" based on the information above?

Accepted Answer

A)  $615,000 
B)  $650,000 
C)  $655,000 
D)  $700,000 
E)  $740,000 
A)  $615,000 
B)  $650,000 
C)  $655,000 
D)  $700,000 
E)  $740,000

Question 20

Given the following information, determine Salem Company's net fixed assets. Sales = $10,000,000
Total asset turnover = 4 times
Current ratio = 2.40
Current liabilities = $500,000
Total assets = current assets + fixed assets

Accepted Answer

A)  $1,200,000 
B)  $4,800,000 
C)  $1,300,000 
D)  Cannot be determined 
A)  $1,200,000 
B)  $4,800,000 
C)  $1,300,000 
D)  Cannot be determined

Which is not one of the five ratio categories?

Which business transaction will affect the quick ratio?

The major types of financial ratios include all of the following except:

Financing activities also include long-term purchases and sales of financial assets.

A firm has current assets of $10,000 and current liabilities of $6,000. Cash and marketable securities total $4,000, the balance in accounts receivable is $2,000, and the book value of inventory is $4,000. The firm's net working capital is:

The Du Pont equations can be used to isolate problems.

Liquidity Ratios measure the firm's ability to meet its short-term financial obligations.

Depreciation is considered in which area of the Statement of Cash Flows?

Which of the following actions will improve the current ratio?

A firm with an equity multiplier of 4.0, will have a debt ratio of:

What is the return on assets (ROA) for a firm that has a debt ratio of 0.65, a return on sales of 6.5%, sales of $740,000, and a total asset turnover of 4?

Annual reports are in a sense, evaluations of management's performance but since they are prepared by management they are likely to:

A low turnover figure can mean some old inventory is on the books that isn't being used.

A firm has current liabilities of $200,000, long term debt of $500,000, and equity of $1,200,000. Its debt ratio is_____.

Explain the different types of activities presented in the statement of cash flows.

The ultimate test of a firm's efficient use of its stockholders money is its return on equity.

A high inventory turnover ratio would be important to a company whose product has a high level of spoilage.

In two successive years, it is possible for a firm to have identical profit and maintain identical levels of assets, but have different return on equity.

Given the following information, determine Salem Company's net fixed assets. Sales = $10,000,000 Total asset turnover = 4 times Current ratio = 2.40 Current liabilities = $500,000 Total assets = current assets + fixed assets

Foundations

Financial Background: a Review of Accounting, Financial Statements, and Taxes

Financial Planning

The Financial System, Corporate Governance, and Interest

Time Value of Money

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

Risk and Return

Capital Budgeting

Cash Flow Estimation

Risk Topics and Real Options in Capital Budgeting

Cost of Capital

Capital Structure and Leverage

Dividends

The Management of Working Capital Multiple Choice Questions

The Management of Working Capital

Corporate Restructuring

International Finance

Filters

Exam 3: Cash Flows and Financial Analysis

Which is not one of the five ratio categories?

Which business transaction will affect the quick ratio?

The major types of financial ratios include all of the following except:

Financing activities also include long-term purchases and sales of financial assets.

A firm has current assets of $10,000 and current liabilities of $6,000. Cash and marketable securities total $4,000, the balance in accounts receivable is $2,000, and the book value of inventory is $4,000. The firm's net working capital is:

The Du Pont equations can be used to isolate problems.

Liquidity Ratios measure the firm's ability to meet its short-term financial obligations.

Depreciation is considered in which area of the Statement of Cash Flows?

Which of the following actions will improve the current ratio?

A firm with an equity multiplier of 4.0, will have a debt ratio of:

What is the return on assets (ROA) for a firm that has a debt ratio of 0.65, a return on sales of 6.5%, sales of $740,000, and a total asset turnover of 4?

Annual reports are in a sense, evaluations of management's performance but since they are prepared by management they are likely to:

A low turnover figure can mean some old inventory is on the books that isn't being used.

A firm has current liabilities of $200,000, long term debt of $500,000, and equity of $1,200,000. Its debt ratio is_____.

Explain the different types of activities presented in the statement of cash flows.

The ultimate test of a firm's efficient use of its stockholders money is its return on equity.

A high inventory turnover ratio would be important to a company whose product has a high level of spoilage.

In two successive years, it is possible for a firm to have identical profit and maintain identical levels of assets, but have different return on equity.

Given the following information, determine Salem Company's net fixed assets. Sales = $10,000,000 Total asset turnover = 4 times Current ratio = 2.40 Current liabilities = $500,000 Total assets = current assets + fixed assets

Foundations

Financial Background: a Review of Accounting, Financial Statements, and Taxes

Financial Planning

The Financial System, Corporate Governance, and Interest

Time Value of Money

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

Risk and Return

Capital Budgeting

Cash Flow Estimation

Risk Topics and Real Options in Capital Budgeting

Cost of Capital

Capital Structure and Leverage

Dividends

The Management of Working Capital Multiple Choice Questions

The Management of Working Capital

Corporate Restructuring

International Finance

Filters