Question 1

Gaspares Agricultural Cooperative has current liabilities of $162,500, net working capital of $28,560, inventory of $175,800, and sales of $1,941,840.What is the quick ratio?

Accepted Answer

A) .07 
B) .16 
C) .09 
D) 1.08 
E) 1.18

Question 2

A firm has net income of $197,400, a return on assets of 8.4 percent, and a debt-equity ratio of .72.What is the return on equity?

Accepted Answer

A) 11.67 percent 
B) 18.98 percent 
C) 14.45 percent 
D) 16.22 percent 
E) 15.06 percent

Question 3

A firm has sales of $311,000 and net income of $31,600.The price-sales ratio is 3.24 and market price is $36 per share.How many shares are outstanding?

Accepted Answer

A) 20,608 
B) 27,990 
C) 28,356 
D) 30,515 
E) 31,011

Question 4

Rogers Radiators has net income of $48,200, sales of $947,100, a capital intensity ratio of .87, and an equity multiplier of 1.53.What is the return on equity?

Accepted Answer

A) 6.77 percent 
B) 5.93 percent 
C) 8.95 percent 
D) 12.21 percent 
E) 14.09 percent

Question 5

The cash ratio is used to evaluate the:

Accepted Answer

A) liquidity of a firm. 
B) speed at which a firm generates cash. 
C) length of time that a firm can pay its bills if no additional cash becomes available. 
D) ability of a firm to pay the interest on its debt. 
E) relationship between the firm's cash balance and its current liabilities.

Question 6

World Exports has total assets of $938,280, a total asset turnover rate of 1.18, a debt-equity ratio of .47, and a return on equity of 18.7 percent.What is the firm's net income?

Accepted Answer

A) $119,359.43 
B) $88,303.33 
C) $104,624.14 
D) $121,548.09 
E) $92,236.67

Question 7

The sustainable growth rate is based on the premise that:

Accepted Answer

A) an additional dollar of debt will be acquired only if an additional dollar in equity shares is issued. 
B) no additional equity will be added to the firm. 
C) the debt-equity ratio will be held constant. 
D) the dividend payout ratio will be zero. 
E) the dividend payout ratio will increase at a steady rate.

Question 8

Tessler Farms has a return on equity of 11.28 percent, a debt-equity ratio of 1.03, and a total asset turnover of .87.What is the return on assets?

Accepted Answer

A) 5.56 percent 
B) 8.06 percent 
C) 13.67 percent 
D) 15.24 percent 
E) 17.41 percent

Question 9

High Road Transport has a current stock price of $5.60.For the past year, the company had net income of $287,400, total equity of $992,300, sales of $1,511,000, and 750,000 shares outstanding.What is the market-to-book ratio?

Accepted Answer

A) 3.54 
B) 3.81 
C) 3.99 
D) 4.47 
E) 4.23

Question 10

Andras Technology has accounts receivable of $35,680, total assets of $538,500, cost of goods sold of $325,400, and a capital intensity ratio of ..90.What is the accounts receivable turnover rate?

Accepted Answer

A) 15.56 
B) 16.77 
C) 9.12 
D) 10.13 
E) 10.31

Question 11

Mercier United has net income of $128,470.There are currently 32.67 days' sales in receivables.Total assets are $1,419,415, total receivables are $122,306, and the debt-equity ratio is .40.What is the return on equity?

Accepted Answer

A) 11.42 percent 
B) 12.67 percent 
C) 13.09 percent 
D) 13.48 percent 
E) 15.03 percent

Question 12

It is important to review not just the Current Ratio, but also the Quick Ratio and Cash Ratio because:

Accepted Answer

A) the Cash Ratio must always provide a greater statistic than the Current Ratio and Quick Ratio. 
B) the Quick Ratio includes inventory that can be easily liquidated for cash. 
C) a low Current Ratio may not necessarily indicate a problem with a company. 
D) companies can operate with a Cash Ratio close to zero and maintain liquidity. 
E) GAAP requires it.

Question 13

ABD common stock is selling for $36.08 a share.The company has earnings per share of $.34 and a book value per share of $12.19.What is the market-to-book ratio?

Accepted Answer

A) 8.71 
B) 7.69 
C) 2.96 
D) 3.97 
E) 5.92

Question 14

Wilberton's has total assets of $537,800, net fixed assets of $412,400, long-term debt of $323,900, and total debt of $388,700.If inventory is $173,900, what is the current ratio?

Accepted Answer

A) 2.01 
B) .52 
C) .84 
D) 1.18 
E) 1.94

Question 15

The Kids' Mart has a market-to-book ratio of 3.3, net income of $87,100, a book value per share of $18.50, and 7,500 shares of stock outstanding.What is the price-earnings ratio?

Accepted Answer

A) 4.34 
B) 8.16 
C) 5.61 
D) 6.25 
E) 5.26

Question 16

For the most recent year, Wilson Enterprises had sales of $689,000, cost of goods sold of $492,300, depreciation expense of $61,200, additions to retained earnings of $48,560, and dividends per share of $2.18.There are 12,000 shares of common stock outstanding and the tax rate is 35 percent.What is the times interest earned ratio?

Accepted Answer

A) 5.47 
B) 5.09 
C) 6.59 
D) 7.15 
E) 3.67

Question 17

Wiggle Pools has total equity of $358,200 and net income of $47,500.The debt-equity ratio is .68 and the total asset turnover is 1.2.What is the profit margin?

Accepted Answer

A) 4.82 percent 
B) 5.23 percent 
C) 5.67 percent 
D) 6.58 percent 
E) 7.31 percent

Question 18

You are analyzing a company that has cash of $8,800, accounts receivable of $15,800, fixed assets of $87,600, accounts payable of $40,300, and inventory of $46,900.What is the quick ratio?

Accepted Answer

A) 1.20 
B) .67 
C) .83 
D) .61 
E) 1.64

Question 19

UXZ has sales of $683,200, cost of goods sold of $512,900, and inventory of $74,315.What is the inventory turnover rate?

Accepted Answer

A) 7.33 times 
B) 6.90 times 
C) 5.70 times 
D) 7.14 times 
E) 8.47 times

Question 20

Dellf's has a profit margin of 3.8 percent on sales of $287,200.The firm currently has 5,000 shares of stock outstanding at a market price of $7.11 per share.What is the price-earnings ratio?

Accepted Answer

A) 3.26 
B) 8.02 
C) 11.50 
D) 5.93 
E) 12.84

Exam 3: Working With Financial Statements