Question 1

Match the correct ratio name from the list below labeled a through g with each formula appearing in items
-(Cash + accounts receivable + marketable securities) / current liabilities

Accepted Answer

A)  Return on sales 
B)  Quick ratio 
C)  Average tax rate 
D)  Current ratio 
E)  Return on assets
F) Return on equity
G) Inventory turnover

Question 2

Match the correct ratio name from the list below labeled a through f with the ratio formulas appearing in items
-Average total liabilities / average total shareholders' equity

Accepted Answer

A)  Debt/equity ratio 
B)  Capital structure leverage 
C)  Return on sales 
D)  Long term debt ratio 
E)  Return on equity
F) Common equity leverage

Question 3

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items
-Inventory turnover

Accepted Answer

A)  Sales and expense management 
B)  Working capital management 
C)  Capital structure management

Question 4

Match the correct ratio name from the list below labeled a through f with the ratio formulas appearing in items
-Net income / average shareholders' equity

Accepted Answer

A)  Debt/equity ratio 
B)  Capital structure leverage 
C)  Return on sales 
D)  Long term debt ratio 
E)  Return on equity
F) Common equity leverage

Question 5

Madison Company has current assets, current liabilities, and long-term liabilities of $8,000, $4,000, and $6,000, respectively.Within these amounts, inventory was $2,000, receivables were $2,000, cash was $4,000, and payables were $1,000.Calculate Madison's quick ratio.What information does this provide?

Accepted Answer

The answer of Madison Company has current assets, current liabilities,...

Question 6

Egan Company has the following assets on January 1, 2010 and January 1, 2009.  If Egan's quick ratio is 3.00 for 2010, what is the amount of its current liabilities?

Accepted Answer

A)  $325,000 
B)  $256,000 
C)  $285,000 
D)  There is not enough information to answer this question.

Question 7

Dorian Company has a current ratio of 0.27 and return on equity of 0.05.Which of the following statements is the best regarding Dorian's profitability and solvency?

Accepted Answer

A)  Dorian is very profitable, but not very solvent. 
B)  Dorian is very profitable and very solvent. 
C)  Dorian is not very profitable, but very solvent. 
D)  Dorian is not very profitable and not very solvent.

Question 8

Timberlake Company has total assets, liabilities, and shareholders' equity of $28,000, $15,000, and $21,000, respectively, at the beginning of 2010.At the end of 2010, total assets, liabilities, and shareholders' equity were reported at $24,000, $13,000, and $19,000, respectively.
-What is Timberlake's debt to equity ratio?

Accepted Answer

A)  0. 70 
B)  1. 17 
C)  0. 71 
D)  1. 13

Question 9

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items
-Profit margin

Accepted Answer

A)  Sales and expense management 
B)  Working capital management 
C)  Capital structure management

Question 10

Match the correct ratio name from the list below labeled a through g with each formula appearing in items
-(Net income + interest expense [1-tax rate]) / sales

Accepted Answer

A)  Return on sales 
B)  Quick ratio 
C)  Average tax rate 
D)  Current ratio 
E)  Return on assets
F) Return on equity
G) Inventory turnover

Question 11

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items
-Current ratio

Accepted Answer

A)  Sales and expense management 
B)  Working capital management 
C)  Capital structure management

Question 12

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items
-Return on sales

Accepted Answer

A)  Sales and expense management 
B)  Working capital management 
C)  Capital structure management

Question 13

Timberlake Company has total assets, liabilities, and shareholders' equity of $28,000, $15,000, and $21,000, respectively, at the beginning of 2010.At the end of 2010, total assets, liabilities, and shareholders' equity were reported at $24,000, $13,000, and $19,000, respectively.
-How much additional debt can Timberlake Company incur and still have its debt/equity ratio remain less than or equal to 1.00?

Accepted Answer

A)  $6,000 
B)  $25,000 
C)  $12,000 
D)  $24,000

Question 14

The following ratios were computed from the financial statement of Carlos Technologies:  Which of the following statements is true?

Accepted Answer

A)  There has been a steady decline in ROE from 2009 through 2011. 
B)  The increase in ROA is due primarily to the changes in asset turnover. 
C)  The changes in ROA could be due to increasing sales. 
D)  The change in ROA could be due to a large increase in the asset base of the company.

Exam 4: Using Financial Statements to Analyze Value Creation

Match the correct ratio name from the list below labeled a through g with each formula appearing in items -(Cash + accounts receivable + marketable securities) / current liabilities

Match the correct ratio name from the list below labeled a through f with the ratio formulas appearing in items -Average total liabilities / average total shareholders' equity

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items -Inventory turnover

Match the correct ratio name from the list below labeled a through f with the ratio formulas appearing in items -Net income / average shareholders' equity

Egan Company has the following assets on January 1, 2010 and January 1, 2009. If Egan's quick ratio is 3.00 for 2010, what is the amount of its current liabilities?

Dorian Company has a current ratio of 0.27 and return on equity of 0.05.Which of the following statements is the best regarding Dorian's profitability and solvency?

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items -Profit margin

Match the correct ratio name from the list below labeled a through g with each formula appearing in items -(Net income + interest expense [1-tax rate]) / sales

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items -Current ratio

Match the correct value driver category from the list below labeled a through c with each ratio that appears in items -Return on sales

The following ratios were computed from the financial statement of Carlos Technologies: Which of the following statements is true?