Question 1

On March 31, Adolpha, Inc. reported the following information on its financial statements.   What is the available net working capital for Adolpha, Inc.?

Accepted Answer

A)  -$126,922 
B)  -$66,133 
C)  $60,789 
D)  $936,510 
A)  -$126,922 
B)  -$66,133 
C)  $60,789 
D)  $936,510

Question 2

A firm with a very low debt-equity ratio has a low risk of defaulting on its loans.

Accepted Answer

A) True 
 B)False

Question 3

Financial ratios can reveal a lot about a company's liquidity, activity, and profitability.

Accepted Answer

A) True 
 B)False

Question 4

Markets can only be efficient if many competent analysts are performing fundamental analysis.

Accepted Answer

A) True 
 B)False

Question 5

For a company to remain in business for the long term, cash flow from investing activities and financing activities must generally be positive numbers.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a readily available source of industry comparisons.
I. Standard & Poor's
II. MSN Money, Yahoo Finance and other financial portals
III. Mergent (Moody's)
IV. The Wall Street Journal

Accepted Answer

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

Question 7

Investors who want to analyze a company's ratios usually need to compute them from the financial statements.

Accepted Answer

A) True 
 B)False

Question 8

The business cycle reflects economic changes only in the industrial sectors of the economy.

Accepted Answer

A) True 
 B)False

Question 9

In addition to company reports, Value Line also publishes industry analyses.

Accepted Answer

A) True 
 B)False

Question 10

Economic analysis is relatively useless for investment purposes since the stock market is used to forecast the economy.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would be found on a company's balance sheet?
I. Accounts receivable
II. Interest expense
III. Property plant and equipment
IV. Total stockholders' equity

Accepted Answer

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

Question 12

Banks can use the times interest earned ratio as a measure of a borrower's ability to repay their loan.

Accepted Answer

A) True 
 B)False

Question 13

Fundamental analysis encompasses return, but not risk, in the valuation process.

Accepted Answer

A) True 
 B)False

Question 14

Price-to-book-value indicates how aggressively a stock is being priced.

Accepted Answer

A) True 
 B)False

Question 15

For most companies, the dividend payout ratio falls within the range of

Accepted Answer

A)  10 to 20%. 
B)  20 to 40%. 
C)  40 to 60%. 
D)  60 to 80%. 
A)  10 to 20%. 
B)  20 to 40%. 
C)  40 to 60%. 
D)  60 to 80%.

Question 16

Which one of the following is a leverage measure?

Accepted Answer

A)  times interest earned 
B)  net working capital 
C)  return on equity 
D)  net profit margin 
A)  times interest earned 
B)  net working capital 
C)  return on equity 
D)  net profit margin

Question 17

Rising corporate profits and are likely to have the greatest effect on which of the following industrial sectors?

Accepted Answer

A)  business equipment 
B)  defense 
C)  food and agriculture 
D)  consumer durables 
A)  business equipment 
B)  defense 
C)  food and agriculture 
D)  consumer durables

Question 18

If a firm has an ROA of 10% and an ROE of 10%, then the

Accepted Answer

A)  operating results of the firm are improving. 
B)  firm has no financial leverage. 
C)  firm must have enough cash on hand to pay some extra dividends. 
D)  firm is losing money. 
A)  operating results of the firm are improving. 
B)  firm has no financial leverage. 
C)  firm must have enough cash on hand to pay some extra dividends. 
D)  firm is losing money.

Question 19

The following information is available for the Oil Creek Corporation.   
(a) What is the current ratio?
(b) What is the net working capital?
(c) What is the net income?
(d) What is the return on equity?
(e) What is the total asset turnover?
(f) What is the debt-equity ratio?
(g) What is the accounts receivable turnover?
(h) What is the earnings per share (EPS)?
(i) What is the price to earnings (P/E) ratio?

Accepted Answer

(a) 0.88
(b) -$5,000

Question 20

Which of the following measures excludes non-cash charges against income.

Accepted Answer

A)  operating expenses 
B)  EBIT 
C)  net income before taxes 
D)  EBITDA 
A)  operating expenses 
B)  EBIT 
C)  net income before taxes 
D)  EBITDA

On March 31, Adolpha, Inc. reported the following information on its financial statements. What is the available net working capital for Adolpha, Inc.?

A firm with a very low debt-equity ratio has a low risk of defaulting on its loans.

Financial ratios can reveal a lot about a company's liquidity, activity, and profitability.

Markets can only be efficient if many competent analysts are performing fundamental analysis.

For a company to remain in business for the long term, cash flow from investing activities and financing activities must generally be positive numbers.

Which of the following is a readily available source of industry comparisons. I. Standard & Poor's II. MSN Money, Yahoo Finance and other financial portals III. Mergent (Moody's) IV. The Wall Street Journal

Investors who want to analyze a company's ratios usually need to compute them from the financial statements.

The business cycle reflects economic changes only in the industrial sectors of the economy.

In addition to company reports, Value Line also publishes industry analyses.

Economic analysis is relatively useless for investment purposes since the stock market is used to forecast the economy.

Which of the following would be found on a company's balance sheet? I. Accounts receivable II. Interest expense III. Property plant and equipment IV. Total stockholders' equity

Banks can use the times interest earned ratio as a measure of a borrower's ability to repay their loan.

Fundamental analysis encompasses return, but not risk, in the valuation process.

Price-to-book-value indicates how aggressively a stock is being priced.

For most companies, the dividend payout ratio falls within the range of

Which one of the following is a leverage measure?

Rising corporate profits and are likely to have the greatest effect on which of the following industrial sectors?

If a firm has an ROA of 10% and an ROE of 10%, then the

Which of the following measures excludes non-cash charges against income.

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 7: Analyzing Common Stocks

On March 31, Adolpha, Inc. reported the following information on its financial statements. What is the available net working capital for Adolpha, Inc.?

A firm with a very low debt-equity ratio has a low risk of defaulting on its loans.

Financial ratios can reveal a lot about a company's liquidity, activity, and profitability.

Markets can only be efficient if many competent analysts are performing fundamental analysis.

For a company to remain in business for the long term, cash flow from investing activities and financing activities must generally be positive numbers.

Which of the following is a readily available source of industry comparisons. I. Standard & Poor's II. MSN Money, Yahoo Finance and other financial portals III. Mergent (Moody's) IV. The Wall Street Journal

Investors who want to analyze a company's ratios usually need to compute them from the financial statements.

The business cycle reflects economic changes only in the industrial sectors of the economy.

In addition to company reports, Value Line also publishes industry analyses.

Economic analysis is relatively useless for investment purposes since the stock market is used to forecast the economy.

Which of the following would be found on a company's balance sheet? I. Accounts receivable II. Interest expense III. Property plant and equipment IV. Total stockholders' equity

Banks can use the times interest earned ratio as a measure of a borrower's ability to repay their loan.

Fundamental analysis encompasses return, but not risk, in the valuation process.

Price-to-book-value indicates how aggressively a stock is being priced.

For most companies, the dividend payout ratio falls within the range of

Which one of the following is a leverage measure?

Rising corporate profits and are likely to have the greatest effect on which of the following industrial sectors?

If a firm has an ROA of 10% and an ROE of 10%, then the

Which of the following measures excludes non-cash charges against income.

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters