Question 1

Which of the following is NOT true of common-size income statements?

Accepted Answer

A)  Each income statement item is standardized by dividing it by total assets. 
B)  Income statement accounts are represented as percentages of net sales. 
C)  Each income statement item is standardized by dividing it by net sales. 
D)  Common-size income statements analysis is a specialized application of ratio analysis. 
A)  Each income statement item is standardized by dividing it by total assets. 
B)  Income statement accounts are represented as percentages of net sales. 
C)  Each income statement item is standardized by dividing it by net sales. 
D)  Common-size income statements analysis is a specialized application of ratio analysis.

Question 2

Which one of the following statements is NOT correct?

Accepted Answer

A)  A leveraged firm is riskier than a firm that is not leveraged. 
B)  A leveraged firm is less risky than a firm that is not leveraged. 
C)  A firm that uses debt magnifies the return to its shareholders. 
D)  A firm that does not use debt incurs opportunity cost of increasing value of shares. 
A)  A leveraged firm is riskier than a firm that is not leveraged. 
B)  A leveraged firm is less risky than a firm that is not leveraged. 
C)  A firm that uses debt magnifies the return to its shareholders. 
D)  A firm that does not use debt incurs opportunity cost of increasing value of shares.

Question 3

Which one of the following is a criticism of equating the goals of maximizing the return on equity (ROE) of a firm and maximizing the firm's shareholder wealth?

Accepted Answer

A)  ROE is based on after-tax earnings, not cash flows. 
B)  ROE does not consider risk. 
C)  ROE ignores the size of the initial investment as well as future cash flows. 
D)  All of the above are criticisms of ROE as a goal. 
A)  ROE is based on after-tax earnings, not cash flows. 
B)  ROE does not consider risk. 
C)  ROE ignores the size of the initial investment as well as future cash flows. 
D)  All of the above are criticisms of ROE as a goal.

Question 4

Zidane Enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of $197,333. What is the firm's quick ratio? Round your final answer to two decimal places.

Accepted Answer

A)  0.72 
B)  1.20 
C)  1.92 
D)  None of the above 
A)  0.72 
B)  1.20 
C)  1.92 
D)  None of the above

Which of the following is NOT true of common-size income statements?

Which one of the following statements is NOT correct?

Which one of the following is a criticism of equating the goals of maximizing the return on equity (ROE) of a firm and maximizing the firm's shareholder wealth?

Zidane Enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of $197,333. What is the firm's quick ratio? Round your final answer to two decimal places.

The Financial Manager and the Firm

The Financial System and the Level of Interest Rates

The Financial System and the Level of Interest Rates

The Time Value of Money

Discounted Cash Flows and Valuation

Risk and Return

Bond Valuation and the Structure of Interest Rates

Stock Valuation

The Fundamentals of Capital Budgeting

Cash Flows and Capital Budgeting

Evaluating Project Economics

The Cost of Capital

Working Capital Management

How Firms Raise Capital

Capital Structure Policy

Dividends, Stock Repurchases, and Payout Policy

Business Formation, Growth, and Valuation

Financial Planning and Managing Growth

Options and Corporate Finance

International Financial Management

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Exam 4: Analyzing Financial Statements

Which of the following is NOT true of common-size income statements?

Which one of the following statements is NOT correct?

Which one of the following is a criticism of equating the goals of maximizing the return on equity (ROE) of a firm and maximizing the firm's shareholder wealth?

Zidane Enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of $197,333. What is the firm's quick ratio? Round your final answer to two decimal places.

The Financial Manager and the Firm

The Financial System and the Level of Interest Rates

The Financial System and the Level of Interest Rates

The Time Value of Money

Discounted Cash Flows and Valuation

Risk and Return

Bond Valuation and the Structure of Interest Rates

Stock Valuation

The Fundamentals of Capital Budgeting

Cash Flows and Capital Budgeting

Evaluating Project Economics

The Cost of Capital

Working Capital Management

How Firms Raise Capital

Capital Structure Policy

Dividends, Stock Repurchases, and Payout Policy

Business Formation, Growth, and Valuation

Financial Planning and Managing Growth

Options and Corporate Finance

International Financial Management

Filters