Question 1

The market liquidity of a security can be measured using

Accepted Answer

A)  Trading turnover. 
B)  Bid-Ask spread. 
C)  Price of the security. 
D)  a and b. 
E)  b and c. 
A)  Trading turnover. 
B)  Bid-Ask spread. 
C)  Price of the security. 
D)  a and b. 
E)  b and c. D

Question 2

The practice of comparing the firm to a subset of industry firms comparable in size or characteristics is referred to as

Accepted Answer

A)  common size analysis 
B)  cross-sectional analysis 
C)  DuPont analysis 
D)  proforma analysis 
E)  time-series analysis 
A)  common size analysis 
B)  cross-sectional analysis 
C)  DuPont analysis 
D)  proforma analysis 
E)  time-series analysis B

Question 3

Which equation is valid?

Accepted Answer

A)  g = Percent of earnings retained ÷ Return on equity 
B)  g = Return on equity ÷ Percent of earnings retained 
C)  g = Return on equity ÷ Return on total assets 
D)  g = Percent of earnings retained x Return on equity 
E)  g = Total assets x Return on total assets 
A)  g = Percent of earnings retained ÷ Return on equity 
B)  g = Return on equity ÷ Percent of earnings retained 
C)  g = Return on equity ÷ Return on total assets 
D)  g = Percent of earnings retained x Return on equity 
E)  g = Total assets x Return on total assets D

Question 4

An estimate of the discounted value of future lease payments can be obtained by:

Accepted Answer

A)  Discounting future lease payments at the firm's cost of debt. 
B) Discounting future lease payments at the firm's cost of capital. 
C)  Applying a multiple to forthcoming minimum lease payments. 
D)  a or b. 
E)  a or c. 
A)  Discounting future lease payments at the firm's cost of debt. 
B) Discounting future lease payments at the firm's cost of capital. 
C)  Applying a multiple to forthcoming minimum lease payments. 
D)  a or b. 
E)  a or c.

Question 5

Which ratio is considered an internal liquidity ratio?

Accepted Answer

A)  Total asset turnover 
B)  Net fixed asset turnover 
C)  Receivables turnover 
D)  Equity turnover 
E)  Inventory turnover 
A)  Total asset turnover 
B)  Net fixed asset turnover 
C)  Receivables turnover 
D)  Equity turnover 
E)  Inventory turnover

Question 6

A common-size balance sheet expresses all balance sheet items

Accepted Answer

A)  as a percentage of Current Assets. 
B)  as a percentage of Fixed Assets. 
C)  as a percentage of Total Assets. 
D)  as a percentage of Net Income. 
E)  as a percentage of Sales. 
A)  as a percentage of Current Assets. 
B)  as a percentage of Fixed Assets. 
C)  as a percentage of Total Assets. 
D)  as a percentage of Net Income. 
E)  as a percentage of Sales.

Question 7

The five major classes of ratios include the following, except

Accepted Answer

A)  internal liquidity. 
B)  risk analysis. 
C)  growth analysis. 
D)  market performance. 
E)  operating performance. 
A)  internal liquidity. 
B)  risk analysis. 
C)  growth analysis. 
D)  market performance. 
E)  operating performance.

Question 8

Which of the following factors would be indicative of a high quality balance sheet?

Accepted Answer

A)  Book value is greater than market value 
B)  The presence of off-balance sheet liabilities 
C)  Market value is greater than book value 
D)  Very little unused borrowing capacity 
E)  None of the above 
A)  Book value is greater than market value 
B)  The presence of off-balance sheet liabilities 
C)  Market value is greater than book value 
D)  Very little unused borrowing capacity 
E)  None of the above

Question 9

Which of the following is not a use of financial ratios?

Accepted Answer

A)  Stock valuation 
B)  Assigning credit quality ratings on bonds 
C)  Predicting insolvency 
D)  Identification of internal corporate variables that affect a stock's systematic risk 
E)  None of the above (that is, all are uses of financial ratios) 
A)  Stock valuation 
B)  Assigning credit quality ratings on bonds 
C)  Predicting insolvency 
D)  Identification of internal corporate variables that affect a stock's systematic risk 
E)  None of the above (that is, all are uses of financial ratios)

Question 10

Which of the following statements regarding financial risk and business risk is true?

Accepted Answer

A)  The acceptable level of financial risk for a firm depends on its business risk. 
B)  A firm with a greater degree of business risk has the ability to take on more debt. 
C)  A firm with a greater degree of financial risk typically takes on less business risk. 
D)  Financial risk and business risk are both important but they are not related in any way. 
E)  Financial risk is more important for small firms and business risk is more important for large firms. 
A)  The acceptable level of financial risk for a firm depends on its business risk. 
B)  A firm with a greater degree of business risk has the ability to take on more debt. 
C)  A firm with a greater degree of financial risk typically takes on less business risk. 
D)  Financial risk and business risk are both important but they are not related in any way. 
E)  Financial risk is more important for small firms and business risk is more important for large firms.

Question 11

What was BMC'S quick ratio for 2014?

Accepted Answer

A)  1.72 
B)  1.37 
C)  1.02 
D)  0.85 
E)  0.55 
A)  1.72 
B)  1.37 
C)  1.02 
D)  0.85 
E)  0.55

Question 12

What was BMC'S interest coverage for 2014?

Accepted Answer

A)  6.82 
B)  3.04 
C)  2.74 
D)  2.04 
E)  1.41 
A)  6.82 
B)  3.04 
C)  2.74 
D)  2.04 
E)  1.41

Question 13

Operating performance is divided into which two subcategories of ratios?

Accepted Answer

A)  efficiency and profitability 
B)  efficiency and debt 
C)  profitability and growth 
D)  debt and equity 
E)  liquidity and leverage 
A)  efficiency and profitability 
B)  efficiency and debt 
C)  profitability and growth 
D)  debt and equity 
E)  liquidity and leverage

Question 14

What was BMC'S return on equity in 2014?

Accepted Answer

A)  4.8% 
B)  5.9% 
C)  6.7% 
D)  8.3% 
E)  11.6% 
A)  4.8% 
B)  5.9% 
C)  6.7% 
D)  8.3% 
E)  11.6%

Question 15

What was BMC'S total asset turnover for 2014?

Accepted Answer

A)  0.23 
B)  1.28 
C)  1.46 
D)  0.87 
E)  0.68 
A)  0.23 
B)  1.28 
C)  1.46 
D)  0.87 
E)  0.68

The market liquidity of a security can be measured using

The practice of comparing the firm to a subset of industry firms comparable in size or characteristics is referred to as

Which equation is valid?

An estimate of the discounted value of future lease payments can be obtained by:

Which ratio is considered an internal liquidity ratio?

A common-size balance sheet expresses all balance sheet items

The five major classes of ratios include the following, except

Which of the following factors would be indicative of a high quality balance sheet?

Which of the following is not a use of financial ratios?

Which of the following statements regarding financial risk and business risk is true?

What was BMC'S quick ratio for 2014?

What was BMC'S interest coverage for 2014?

Operating performance is divided into which two subcategories of ratios?

What was BMC'S return on equity in 2014?

What was BMC'S total asset turnover for 2014?

The Investment Process

The Global Market Investment Decision

Securities Markets: Organization and Operation

Efficient Capital Markets

Portfolio Management

Asset Pricing Models

Multifactor Models of Risk and Return

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Professional Money Management, Alternative Assets and Industry Ethics

Evaluation of Portfolio Performance

Swap Contracts, Convertible Securities and Other Embedded Derivatives

Filters

Exam 8: Analysis of Financial Statements

The market liquidity of a security can be measured using

The practice of comparing the firm to a subset of industry firms comparable in size or characteristics is referred to as

Which equation is valid?

An estimate of the discounted value of future lease payments can be obtained by:

Which ratio is considered an internal liquidity ratio?

A common-size balance sheet expresses all balance sheet items

The five major classes of ratios include the following, except

Which of the following factors would be indicative of a high quality balance sheet?

Which of the following is not a use of financial ratios?

Which of the following statements regarding financial risk and business risk is true?

What was BMC'S quick ratio for 2014?

What was BMC'S interest coverage for 2014?

Operating performance is divided into which two subcategories of ratios?

What was BMC'S return on equity in 2014?

What was BMC'S total asset turnover for 2014?

The Investment Process

The Global Market Investment Decision

Securities Markets: Organization and Operation

Efficient Capital Markets

Portfolio Management

Asset Pricing Models

Multifactor Models of Risk and Return

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Strategies

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Professional Money Management, Alternative Assets and Industry Ethics

Evaluation of Portfolio Performance

Swap Contracts, Convertible Securities and Other Embedded Derivatives

Filters