Question 1

Which one of the following will decrease if a firm can decrease its operating costs,all else constant?

Accepted Answer

A)  return on equity
B)  return on assets
C)  profit margin
D)  total asset turnover
E)  price-earnings ratioF) A) and D)
G) None of the above

Question 2

Last year,which is used as the base year,a firm had cash of $52,accounts receivable of $218,inventory of $509,and net fixed assets of $1,107.This year,the firm has cash of $61,accounts receivable of $198,inventory of $527,and net fixed assets of $1,216.What is the common-base year value of accounts receivable?

Accepted Answer

A)  0.08
B)  0.10
C)  0.88
D)  0.91
E)  1.18F) A) and C)
G) A) and E)

Question 3

Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Accepted Answer

A)  Al's has more net income than Ben's.
B)  Ben's is increasing its earnings at a faster rate than the Al's.
C)  Al's has a higher market value per share than does Ben's.
D)  Ben's has a lower market-to-book ratio than Al's.
E)  Al's has a higher net income than Ben's.F) A) and E)
G) B) and C)

Question 4

Gladstone Pavers has a long-term debt ratio of 0.6 and a current ratio of 1.6.Current liabilities are $700,sales are $4,440,the profit margin is 9.5 percent,and the return on equity is 19.5 percent.How much does the firm have in net fixed assets?

Accepted Answer

A)  $4,880.18
B)  $4,987.69
C)  $5,666.67
D)  $5,848.15
E)  $6,107.70F) C) and D)
G) A) and C)

Question 5

Which one of the following statements is correct?

Accepted Answer

A)  Book values should always be given precedence over market values.
B)  Financial statements are frequently used as the basis for performance evaluations.
C)  Historical information provides no value to someone who is predicting future performance.
D)  Potential lenders place little value on financial statement information.
E)  Reviewing financial information over time has very limited value.F) A) and B)
G) A) and C)

Question 6

According to the Statement of Cash Flows,a decrease in accounts receivable will _____ the cash flow from _____ activities.

Accepted Answer

A)  decrease; operating
B)  decrease; financing
C)  increase; operating
D)  increase; financing
E)  increase; investmentF) B) and E)
G) B) and C)

Question 7

If a firm produces a twelve percent return on assets and also a twelve percent return on equity,then the firm:

Accepted Answer

A)  may have short-term, but not long-term debt.
B)  is using its assets as efficiently as possible.
C)  has no net working capital.
D)  has a debt-equity ratio of 1.0.
E)  has an equity multiplier of 1.0.F) A) and E)
G) A) and B)

Question 8

On a common-base year financial statement,accounts receivables will be expressed relative to which one of the following?

Accepted Answer

A)  current year sales
B)  current year total assets
C)  base-year sales
D)  base-year total assets
E)  base-year accounts receivablesF) B) and E)
G) A) and B)

Question 9

Which one of the following is a source of cash?

Accepted Answer

A)  increase in accounts receivable
B)  decrease in notes payable
C)  decrease in common stock
D)  increase in accounts payable
E)  increase in inventoryF) B) and E)
G) B) and D)

Question 10

Which one of the following is a source of cash?

Accepted Answer

A)  repurchase of common stock
B)  acquisition of debt
C)  purchase of inventory
D)  payment to a supplier
E)  granting credit to a customerF) A) and D)
G) A) and C)

Question 11

The Du Pont identity can be used to help managers answer which of the following questions related to a firm's operations?
I.How many sales dollars has the firm generated per each dollar of assets?
II.How many dollars of assets has a firm acquired per each dollar in shareholders' equity?
III.How much net profit is a firm generating per dollar of sales?
IV.Does the firm have the ability to meet its debt obligations in a timely manner?

Accepted Answer

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

Question 12

A firm has 160,000 shares of stock outstanding,sales of $1.94 million,net income of $126,400,a price-earnings ratio of 18.7,and a book value per share of $7.92.What is the market-to-book ratio?

Accepted Answer

A)  1.87
B)  1.84
C)  2.23
D)  2.45
E)  2.57F) A) and E)
G) None of the above

Question 13

During the year,Kitchen Supply increased its accounts receivable by $130,decreased its inventory by $75,and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Accepted Answer

A)  $245 use of cash
B)  $165 use of cash
C)  $95 use of cash
D)  $95 source of cash
E)  $165 source of cashF) A) and B)
G) C) and D)

Question 14

Taylor's Men's Wear has a debt-equity ratio of 42 percent,sales of $749,000,net income of $41,300,and total debt of $206,300.What is the return on equity?

Accepted Answer

A)  7.79 percent
B)  8.41 percent
C)  8.74 percent
D)  9.09 percent
E)  9.16 percentF) C) and D)
G) B) and C)

Question 15

On a common-size balance sheet all accounts are expressed as a percentage of:

Accepted Answer

A)  sales for the period.
B)  the base year sales.
C)  total equity for the base year.
D)  total assets for the current year.
E)  total assets for the base year.F) A) and E)
G) A) and D)

Question 16

The sources and uses of cash over a stated period of time are reflected on the:

Accepted Answer

A)  income statement.
B)  balance sheet.
C)  tax reconciliation statement.
D)  statement of cash flows.
E)  statement of operating position.F) B) and C)
G) A) and E)

Question 17

The formula which breaks down the return on equity into three component parts is referred to as which one of the following?

Accepted Answer

A)  equity equation
B)  profitability determinant
C)  SIC formula
D)  Du Pont identity
E)  equity performance formulaF) B) and D)
G) A) and D)

Question 18

A firm has an interval measure of 48.This means that the firm has sufficient liquid assets to do which one of the following?

Accepted Answer

A)  pay all of its debts that are due within the next 48 hours
B)  pay all of its debts that are due within the next 48 days
C)  cover its operating costs for the next 48 hours
D)  cover its operating costs for the next 48 days
E)  meet the demands of its customers for the next 48 hoursF) A) and C)
G) B) and D)

Question 19

Lancaster Toys has a profit margin of 7.5 percent,a total asset turnover of 1.71,and a return on equity of 21.01 percent.What is the debt-equity ratio?

Accepted Answer

A)  0.42
B)  0.64
C)  0.66
D)  0.72
E)  0.78F) All of the above
G) A) and B)

Question 20

On the Statement of Cash Flows,which of the following are considered operating activities?
I.costs of goods sold
II.decrease in accounts payable
III.interest paid
IV.dividends paid

Accepted Answer

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

Exam 3: Working With Financial Statements

Correct Answer
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Which one of the following is a source of cash?

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If a firm produces a twelve percent return on assets and also a twelve percent return on equity,then the firm:

Correct Answer
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According to the Statement of Cash Flows,a decrease in accounts receivable will _ the cash flow from _ activities.

Correct Answer
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The sources and uses of cash over a stated period of time are reflected on the:

Correct Answer
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Gladstone Pavers has a long-term debt ratio of 0.6 and a current ratio of 1.6.Current liabilities are $700,sales are $4,440,the profit margin is 9.5 percent,and the return on equity is 19.5 percent.How much does the firm have in net fixed assets?

Correct Answer
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Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Correct Answer
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Which one of the following is a source of cash?

Correct Answer
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On a common-size balance sheet all accounts are expressed as a percentage of:

Correct Answer
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Which one of the following will decrease if a firm can decrease its operating costs,all else constant?

Correct Answer
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Taylor's Men's Wear has a debt-equity ratio of 42 percent,sales of $749,000,net income of $41,300,and total debt of $206,300.What is the return on equity?

Correct Answer
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Which one of the following statements is correct?

Correct Answer
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A firm has 160,000 shares of stock outstanding,sales of $1.94 million,net income of $126,400,a price-earnings ratio of 18.7,and a book value per share of $7.92.What is the market-to-book ratio?

Correct Answer
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The formula which breaks down the return on equity into three component parts is referred to as which one of the following?

Correct Answer
verified

Correct Answer
verified

Lancaster Toys has a profit margin of 7.5 percent,a total asset turnover of 1.71,and a return on equity of 21.01 percent.What is the debt-equity ratio?

Correct Answer
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During the year,Kitchen Supply increased its accounts receivable by $130,decreased its inventory by $75,and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Correct Answer
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On a common-base year financial statement,accounts receivables will be expressed relative to which one of the following?

Correct Answer
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On the Statement of Cash Flows,which of the following are considered operating activities? I.costs of goods sold II.decrease in accounts payable III.interest paid IV.dividends paid

Correct Answer
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A firm has an interval measure of 48.This means that the firm has sufficient liquid assets to do which one of the following?

Correct Answer
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Exam 3: Working With Financial Statements

Correct AnswerverifiedShow Answer

Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

If a firm produces a twelve percent return on assets and also a twelve percent return on equity,then the firm:

Correct AnswerverifiedShow Answer

According to the Statement of Cash Flows,a decrease in accounts receivable will _____ the cash flow from _____ activities.

Correct AnswerverifiedShow Answer

The sources and uses of cash over a stated period of time are reflected on the:

Correct AnswerverifiedShow Answer

Gladstone Pavers has a long-term debt ratio of 0.6 and a current ratio of 1.6.Current liabilities are $700,sales are $4,440,the profit margin is 9.5 percent,and the return on equity is 19.5 percent.How much does the firm have in net fixed assets?

Correct AnswerverifiedShow Answer

Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

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Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

On a common-size balance sheet all accounts are expressed as a percentage of:

Correct AnswerverifiedShow Answer

Which one of the following will decrease if a firm can decrease its operating costs,all else constant?

Correct AnswerverifiedShow Answer

Taylor's Men's Wear has a debt-equity ratio of 42 percent,sales of $749,000,net income of $41,300,and total debt of $206,300.What is the return on equity?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

A firm has 160,000 shares of stock outstanding,sales of $1.94 million,net income of $126,400,a price-earnings ratio of 18.7,and a book value per share of $7.92.What is the market-to-book ratio?

Correct AnswerverifiedShow Answer

The formula which breaks down the return on equity into three component parts is referred to as which one of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Lancaster Toys has a profit margin of 7.5 percent,a total asset turnover of 1.71,and a return on equity of 21.01 percent.What is the debt-equity ratio?

Correct AnswerverifiedShow Answer

During the year,Kitchen Supply increased its accounts receivable by $130,decreased its inventory by $75,and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Correct AnswerverifiedShow Answer

On a common-base year financial statement,accounts receivables will be expressed relative to which one of the following?

Correct AnswerverifiedShow Answer

On the Statement of Cash Flows,which of the following are considered operating activities? I.costs of goods sold II.decrease in accounts payable III.interest paid IV.dividends paid

Correct AnswerverifiedShow Answer

A firm has an interval measure of 48.This means that the firm has sufficient liquid assets to do which one of the following?

Correct AnswerverifiedShow Answer

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According to the Statement of Cash Flows,a decrease in accounts receivable will _ the cash flow from _ activities.

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