Question 1

Which of the following financial ratios is the best measure of the operating effectiveness of a firm's management?

Accepted Answer

A) Current ratio 
B) Gross profit margin 
C) Quick ratio 
D) Return on investment 
A) Current ratio 
B) Gross profit margin 
C) Quick ratio 
D) Return on investment

Question 2

Which of the following statements is true?

Accepted Answer

A) As a general rule,management would want to reduce the firm's average collection period. 
B) As a general rule,management would want to reduce the firm's accounts receivable turnover ratio. 
C) As a general rule,management would want to increase the firm's average collection period. 
D) As a general rule,a firm is not financially affected by the amount of time required to collect its accounts receivable. 
A) As a general rule,management would want to reduce the firm's average collection period. 
B) As a general rule,management would want to reduce the firm's accounts receivable turnover ratio. 
C) As a general rule,management would want to increase the firm's average collection period. 
D) As a general rule,a firm is not financially affected by the amount of time required to collect its accounts receivable.

Question 3

Given an accounts receivable turnover of 8 and annual credit sales of $362,000,the average collection period (360-day year)is

Accepted Answer

A) 90 days. 
B) 45 days. 
C) 75 days. 
D) 60 days. 
A) 90 days. 
B) 45 days. 
C) 75 days. 
D) 60 days.

Question 4

The question "Did the ordinary shareholders receive an adequate return on their investment?" is answered through the use of

Accepted Answer

A) liquidity ratios. 
B) profitability ratios. 
C) coverage ratios. 
D) leverage ratios. 
A) liquidity ratios. 
B) profitability ratios. 
C) coverage ratios. 
D) leverage ratios.

Question 5

Assume that a particular firm has a total asset turnover ratio lower than the industry norm.In addition,this firm's current ratio and acid test ratio also meet industry standards.Based on this information,we can conclude that this firm must have excessive

Accepted Answer

A) accounts receivable. 
B) fixed assets. 
C) debt. 
D) inventory. 
A) accounts receivable. 
B) fixed assets. 
C) debt. 
D) inventory.

Question 6

Sputter Motors has sales of $3,450,000,total assets of $1,240,000,cost of goods sold of $2,550,000,and an inventory turnover of 6.38.What is the amount of Sputter's inventory?

Accepted Answer

A) $421,054 
B) $638,112 
C) $543,000 
D) $399,687 
A) $421,054 
B) $638,112 
C) $543,000 
D) $399,687

Question 7

Kannan Carpets,Inc.has asked you to calculate the company's current ratio for 2001.All you have is a partial balance sheet and some assumptions.Using the information provided,calculate Kannan's current ratio for 2001. Gross profit margin = 50%
Inventory turnover (COGS/Inv)= 5
2001 sales = $3,000
Assets Liabilities & Equity
Cash ? Accounts payable $50
AR $40 Accruals ?
Inventory ? Long-term debt $400
Net fixed assets $500 Equity 250
Total assets $900 Total liab.& equity ?

Accepted Answer

A) 0.3 
B) 0.8 
C) 1.6 
D) 2.2 
A) 0.3 
B) 0.8 
C) 1.6 
D) 2.2

Question 8

One weakness of the interest coverage ratio is that it includes only the annual interest expense as a finance expense that must be paid.

Accepted Answer

A) True 
 B)False

Question 9

Colton Corp.has current assets of $4.5 million.The current ratio is 1.25 and the quick ratio is 0.75.What is the amount of Colton's current liabilities (in millions)?

Accepted Answer

A) $4.5 
B) $1.8 
C) $2.4 
D) $2.9 
E) $3.6 
A) $4.5 
B) $1.8 
C) $2.4 
D) $2.9 
E) $3.6

Question 10

Which of the following ratios indicates how rapidly the firm's credit accounts are being collected?

Accepted Answer

A) Debt ratio 
B) Gross profit margin 
C) Accounts receivable turnover ratio 
D) Fixed asset turnover 
A) Debt ratio 
B) Gross profit margin 
C) Accounts receivable turnover ratio 
D) Fixed asset turnover

Question 11

If Challenge Corporation has sales of $2 million per year (all credit)and an average collection period of 35 days,what is its average amount of accounts receivable?

Accepted Answer

A) $191,781 
B) $57,143 
C) $5,556 
D) $97,222 
A) $191,781 
B) $57,143 
C) $5,556 
D) $97,222

Question 12

Which of the following financial ratios is the best measure of how effectively a firm's management is serving its stockholders?

Accepted Answer

A) Current ratio 
B) Debt ratio 
C) Average collection period 
D) Return on equity 
A) Current ratio 
B) Debt ratio 
C) Average collection period 
D) Return on equity

Which of the following financial ratios is the best measure of the operating effectiveness of a firm's management?

Which of the following statements is true?

Given an accounts receivable turnover of 8 and annual credit sales of $362,000,the average collection period (360-day year)is

The question "Did the ordinary shareholders receive an adequate return on their investment?" is answered through the use of

Assume that a particular firm has a total asset turnover ratio lower than the industry norm.In addition,this firm's current ratio and acid test ratio also meet industry standards.Based on this information,we can conclude that this firm must have excessive

Sputter Motors has sales of $3,450,000,total assets of $1,240,000,cost of goods sold of $2,550,000,and an inventory turnover of 6.38.What is the amount of Sputter's inventory?

One weakness of the interest coverage ratio is that it includes only the annual interest expense as a finance expense that must be paid.

Colton Corp.has current assets of $4.5 million.The current ratio is 1.25 and the quick ratio is 0.75.What is the amount of Colton's current liabilities (in millions)?

Which of the following ratios indicates how rapidly the firm's credit accounts are being collected?

If Challenge Corporation has sales of $2 million per year (all credit)and an average collection period of 35 days,what is its average amount of accounts receivable?

Which of the following financial ratios is the best measure of how effectively a firm's management is serving its stockholders?

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements,taxes and Cash Flows

Time Value of Money - the Basics

The Time Value of Money - Annuities and Other Topics

An Introduction to Risk and Return - History of Financial Market Returns

Risk and Return - Capital Market Theory

Debt Valuation and Interest Rates

Share Valuation

Investment Decision Criteria

Analysing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 4: Financial Analysis - Sizing up Firm Performance

Which of the following financial ratios is the best measure of the operating effectiveness of a firm's management?

Which of the following statements is true?

Given an accounts receivable turnover of 8 and annual credit sales of $362,000,the average collection period (360-day year)is

The question "Did the ordinary shareholders receive an adequate return on their investment?" is answered through the use of

Assume that a particular firm has a total asset turnover ratio lower than the industry norm.In addition,this firm's current ratio and acid test ratio also meet industry standards.Based on this information,we can conclude that this firm must have excessive

Sputter Motors has sales of $3,450,000,total assets of $1,240,000,cost of goods sold of $2,550,000,and an inventory turnover of 6.38.What is the amount of Sputter's inventory?

One weakness of the interest coverage ratio is that it includes only the annual interest expense as a finance expense that must be paid.

Colton Corp.has current assets of $4.5 million.The current ratio is 1.25 and the quick ratio is 0.75.What is the amount of Colton's current liabilities (in millions)?

Which of the following ratios indicates how rapidly the firm's credit accounts are being collected?

If Challenge Corporation has sales of $2 million per year (all credit)and an average collection period of 35 days,what is its average amount of accounts receivable?

Which of the following financial ratios is the best measure of how effectively a firm's management is serving its stockholders?

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements,taxes and Cash Flows

Time Value of Money - the Basics

The Time Value of Money - Annuities and Other Topics

An Introduction to Risk and Return - History of Financial Market Returns

Risk and Return - Capital Market Theory

Debt Valuation and Interest Rates

Share Valuation

Investment Decision Criteria

Analysing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters