Question 1

The Strong Box has sales of $859,700, cost of goods sold of $648,200, net income of $93,100, and accounts receivable of $102,300. How many days of sales are in receivables?

Accepted Answer

A)   57.60 days
B)   40.32 days
C)   54.53 days
D)   29.41 days
E)   43.43 daysF) A) and E)
G) A) and B)

Question 2

Stone Walls has a long-term debt ratio of .6 and a current ratio of 1.2. Current liabilities are $800, sales are $7,800, the profit margin is 6.5 percent, and return on equity is 15.5 percent. What is the amount of the firm's net fixed assets?

Accepted Answer

A)   $8,880.15
B)   $8,017.43
C)   $7,666.67
D)   $5,848.15
E)   $8,977.43F) B) and C)
G) B) and D)

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 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 earnings growth rate than Ben's.F) A) and B)
G) B) and D)

Question 4

Mortgage lenders probably have the most interest in the ________ ratios.

Accepted Answer

A)   return on assets and profit margin
B)   long-term debt and times interest earned
C)   price-earnings and debt-equity
D)   market-to-book and times interest earned
E)   return on equity and price-earningsF) B) and E)
G) None of the above

Question 5

Corner Supply has a current accounts receivable balance of $246,000. Credit sales for the year just ended were $2,430,000. How many days on average did it take for credit customers to pay off their accounts during this past year?

Accepted Answer

A)   44.29 days
B)   55.01 days
C)   55.50 days
D)   36.95 days
E)   41.00 daysF) A) and C)
G) A) and E)

Question 6

Lani's generated net income of $911, depreciation expense was $47, and dividends paid were $25. Accounts payables increased by $15, accounts receivables increased by $28, inventory decreased by $14, and net fixed assets decreased by $8. There was no interest expense. What was the net cash flow from operating activity?

Accepted Answer

A)   $776
B)   $865
C)   $959
D)   $922
E)   $985F) B) and D)
G) None of the above

Question 7

Lancaster Toys has a profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the debt-equity ratio?

Accepted Answer

A)   0.73
B)   0.42
C)   0.81
D)   0.64
E)   0.83F) A) and D)
G) B) and D)

Question 8

Which one of the following is a correct formula for computing the return on equity?

Accepted Answer

A)   Profit margin × ROA
B)   ROA × Equity multiplier
C)   Profit margin × Total asset turnover × Debt-equity ratio
D)   Net income/Total assets
E)   Debt-equity ratio × ROAF) B) and D)
G) B) and C)

Question 9

Which one of these is the least important factor to consider when comparing the financial situations of utility companies that generate electric power and have the same SIC code?

Accepted Answer

A)   Type of ownership
B)   Government regulations affecting the firm
C)   Fiscal year end
D)   Methods of power generation
E)   Number of part-time employeesF) A) and E)
G) C) and E)

Question 10

Activities of a firm that require the spending of cash are known as:

Accepted Answer

A)   sources of cash.
B)   uses of cash.
C)   cash collections.
D)   cash receipts.
E)   cash on hand.F) A) and B)
G) None of the above

Question 11

An increase in which of the following must increase the return on equity, all else constant?

Accepted Answer

A)   Total assets and sales
B)   Net income and total equity
C)   Total asset turnover and debt-equity ratio
D)   Equity multiplier and total equity
E)   Debt-equity ratio and total debtF) A) and D)
G) A) and E)

Question 12

Which one of these identifies the relationship between the return on assets and the return on equity?

Accepted Answer

A)   Profit margin
B)   Profitability determinant
C)   Balance sheet multiplier
D)   DuPont identity
E)   Debt-equity ratioF) A) and D)
G) B) and E)

Question 13

The DuPont identity can be used to help managers answer which of the following questions related to a company's operations?
I. How many sales dollars are being generated per each dollar of assets?
II. How many dollars of assets have been acquired per each dollar in shareholders' equity?
III. How much net profit is being generating per dollar of sales?
IV. Does the company 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) C) and E)
G) A) and E)

Question 14

RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both companies have similar operations. Based on this information, RJ's must be doing which one of the following?

Accepted Answer

A)   Utilizing its fixed assets more efficiently than Sam's
B)   Utilizing its total assets more efficiently than Sam's
C)   Generating $1 in sales for every $1.26 in net fixed assets
D)   Generating $1.26 in net income for every $1 in net fixed assets
E)   Maintaining the same level of current assets as Sam'sF) B) and C)
G) A) and E) B

Question 15

The Tech Store has annual sales of $416,000, a price-earnings ratio of 18, and a profit margin of 3.7 percent. There are 12,000 shares of stock outstanding. What is the price-sales ratio?

Accepted Answer

A)   0.97
B)   0.67
C)   1.08
D)   1.15
E)   0.86F) B) and C)
G) B) and D) B

Question 16

The accounts payable of a company changed from $136,100 to $104,300 over the course of a year. This change represents a:

Accepted Answer

A)   use of $31,800 of cash as investment activity.
B)   source of $31,800 of cash as an operating activity.
C)   source of $31,800 of cash as a financing activity.
D)   source of $31,800 of cash as an investment activity.
E)   use of $31,800 of cash as an operating activity.F) A) and B)
G) A) and C)

Question 17

Taylor's Men's Wear has a debt-equity ratio of 48 percent, sales of $829,000, net income of $47,300, and total debt of $206,300. What is the return on equity?

Accepted Answer

A)   19.29 percent
B)   11.01 percent
C)   15.74 percent
D)   18.57 percent
E)   14.16 percentF) C) and D)
G) B) and C)

Question 18

A firm has total assets with a current book value of $71,600, a current market value of $82,300, and a current replacement cost of $90,400. What is the value of Tobin's Q?

Accepted Answer

A)   0.85
B)   0.87
C)   0.90
D)   0.94
E)   0.91F) A) and C)
G) All of the above

Question 19

Ratios that measure a firm's liquidity are known as ________ ratios.

Accepted Answer

A)   asset management
B)   long-term solvency
C)   short-term solvency
D)   profitability
E)   book value F) B) and D)
G) A) and B) C

Question 20

Canine Supply has sales of $2,800, total assets of $1,900, and a debt-equity ratio of .5. Its return on equity is 15 percent. What is the net income?

Accepted Answer

A)   $210
B)   $130
C)   $240
D)   $350
E)   $190F) B) and C)
G) A) and E)

Exam 3: Working with Financial Statements

The Strong Box has sales of $859,700, cost of goods sold of $648,200, net income of $93,100, and accounts receivable of $102,300. How many days of sales are in receivables?

Correct Answer
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Stone Walls has a long-term debt ratio of .6 and a current ratio of 1.2. Current liabilities are $800, sales are $7,800, the profit margin is 6.5 percent, and return on equity is 15.5 percent. What is the amount of the firm's 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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Mortgage lenders probably have the most interest in the ________ ratios.

Correct Answer
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Corner Supply has a current accounts receivable balance of $246,000. Credit sales for the year just ended were $2,430,000. How many days on average did it take for credit customers to pay off their accounts during this past year?

Correct Answer
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Correct Answer
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Lancaster Toys has a profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the debt-equity ratio?

Correct Answer
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Which one of the following is a correct formula for computing the return on equity?

Correct Answer
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Which one of these is the least important factor to consider when comparing the financial situations of utility companies that generate electric power and have the same SIC code?

Correct Answer
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Activities of a firm that require the spending of cash are known as:

Correct Answer
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An increase in which of the following must increase the return on equity, all else constant?

Correct Answer
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Which one of these identifies the relationship between the return on assets and the return on equity?

Correct Answer
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Correct Answer
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RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both companies have similar operations. Based on this information, RJ's must be doing which one of the following?

Correct Answer
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B

The Tech Store has annual sales of $416,000, a price-earnings ratio of 18, and a profit margin of 3.7 percent. There are 12,000 shares of stock outstanding. What is the price-sales ratio?

Correct Answer
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B

The accounts payable of a company changed from $136,100 to $104,300 over the course of a year. This change represents a:

Correct Answer
verified

Taylor's Men's Wear has a debt-equity ratio of 48 percent, sales of $829,000, net income of $47,300, and total debt of $206,300. What is the return on equity?

Correct Answer
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A firm has total assets with a current book value of $71,600, a current market value of $82,300, and a current replacement cost of $90,400. What is the value of Tobin's Q?

Correct Answer
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Ratios that measure a firm's liquidity are known as ________ ratios.

Correct Answer
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C

Canine Supply has sales of $2,800, total assets of $1,900, and a debt-equity ratio of .5. Its return on equity is 15 percent. What is the net income?

Correct Answer
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Exam 3: Working with Financial Statements

The Strong Box has sales of $859,700, cost of goods sold of $648,200, net income of $93,100, and accounts receivable of $102,300. How many days of sales are in receivables?

Correct AnswerverifiedShow Answer

Stone Walls has a long-term debt ratio of .6 and a current ratio of 1.2. Current liabilities are $800, sales are $7,800, the profit margin is 6.5 percent, and return on equity is 15.5 percent. What is the amount of the firm's 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?

Correct AnswerverifiedShow Answer

Mortgage lenders probably have the most interest in the ________ ratios.

Correct AnswerverifiedShow Answer

Corner Supply has a current accounts receivable balance of $246,000. Credit sales for the year just ended were $2,430,000. How many days on average did it take for credit customers to pay off their accounts during this past year?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Lancaster Toys has a profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the debt-equity ratio?

Correct AnswerverifiedShow Answer

Which one of the following is a correct formula for computing the return on equity?

Correct AnswerverifiedShow Answer

Which one of these is the least important factor to consider when comparing the financial situations of utility companies that generate electric power and have the same SIC code?

Correct AnswerverifiedShow Answer

Activities of a firm that require the spending of cash are known as:

Correct AnswerverifiedShow Answer

An increase in which of the following must increase the return on equity, all else constant?

Correct AnswerverifiedShow Answer

Which one of these identifies the relationship between the return on assets and the return on equity?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both companies have similar operations. Based on this information, RJ's must be doing which one of the following?

Correct AnswerverifiedB

The Tech Store has annual sales of $416,000, a price-earnings ratio of 18, and a profit margin of 3.7 percent. There are 12,000 shares of stock outstanding. What is the price-sales ratio?

Correct AnswerverifiedB

The accounts payable of a company changed from $136,100 to $104,300 over the course of a year. This change represents a:

Correct AnswerverifiedShow Answer

Taylor's Men's Wear has a debt-equity ratio of 48 percent, sales of $829,000, net income of $47,300, and total debt of $206,300. What is the return on equity?

Correct AnswerverifiedShow Answer

A firm has total assets with a current book value of $71,600, a current market value of $82,300, and a current replacement cost of $90,400. What is the value of Tobin's Q?

Correct AnswerverifiedShow Answer

Ratios that measure a firm's liquidity are known as ________ ratios.

Correct AnswerverifiedC

Canine Supply has sales of $2,800, total assets of $1,900, and a debt-equity ratio of .5. Its return on equity is 15 percent. What is the net income?

Correct AnswerverifiedShow Answer

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B

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B

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C

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