Question 1

Pittsburgh Motors has sales of $4,300, net income of $320, total assets of $4,800, and total equity of $2,950. Interest expense is $65. What is the common-size statement value of the interest expense?

Accepted Answer

A)   0.89 percent
B)   1.51 percent
C)   1.69 percent
D)   2.03 percent
E)   1.35 percentF) A) and E)
G) B) and D)

Question 2

The Green Fiddle has current liabilities of $28,000, sales of $156,900, and cost of goods sold of $62,400. The current ratio is 1.22 and the quick ratio is .71. How many days on average does it take to sell the inventory?

Accepted Answer

A)   128.13 days
B)   74.42 days
C)   199.81 days
D)   147.46 days
E)   83.53 daysF) D) and E)
G) A) and B)

Question 3

According to the statement of cash flows, an increase in inventory will ________ the cash flow from ________ activities.

Accepted Answer

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

Question 4

JK Motors has sales of $96,400, costs of $53,800, interest paid of $2,800, and depreciation of $7,100. The tax rate is 21 percent. What is the value of the cash coverage ratio?

Accepted Answer

A)   15.21
B)   12.14
C)   17.27
D)   23.41
E)   12.68F) A) and B)
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 rarely used as the basis for performance evaluations.
C)   Historical information is useful when projecting a company's 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 E)
G) C) and D)

Question 6

The price-sales ratio is especially useful when analyzing firms that have:

Accepted Answer

A)   volatile market prices.
B)   negative earnings.
C)   positive PEG ratios.
D)   a high Tobin's Q.
E)   increasing sales.F) B) and C)
G) C) and E)

Question 7

Green Yard Care has net income of $62,300, a tax rate of 21 percent, and a profit margin of 6.7 percent. Total assets are $1,100,500 and current assets are $328,200. How many dollars of sales are being generated from every dollar of net fixed assets?

Accepted Answer

A)   $2.83
B)   $1.37
C)   $.84
D)   $1.20
E)   $1.23F) B) and E)
G) B) and C)

Question 8

Gem Jewelers has current assets of $687,600, total assets of $1,711,000, net working capital of $223,700, and long-term debt of $450,000. What is the debt-equity ratio?

Accepted Answer

A)   0.87
B)   0.94
C)   1.21
D)   1.15
E)   1.06F) A) and D)
G) None of the above

Question 9

SS Stores has total debt of $4,910 and a debt-equity ratio of 0.52. What is the value of the total assets?

Accepted Answer

A)   $16,128.05
B)   $7,253.40
C)   $9,571.95
D)   $11,034.00
E)   $14,352.31F) A) and E)
G) A) and D)

Question 10

If a company produces a return on assets of 14 percent and also a return on equity of 14 percent, 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) B) and E)
G) C) and D)

Question 11

High Mountain Foods has an equity multiplier of 1.72, a total asset turnover of 1.16, and a profit margin of 4.5 percent. What is the return on assets?

Accepted Answer

A)   6.94 percent
B)   8.98 percent
C)   2.00 percent
D)   7.74 percent
E)   5.22 percentF) C) and D)
G) A) and D)

Question 12

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) A) and D)
G) A) and C)

Question 13

Bernice's has $823,000 in sales. The profit margin is 4.2 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $16.50. What is the price-earnings ratio?

Accepted Answer

A)   3.58
B)   3.98
C)   4.32
D)   3.51
E)   4.27F) B) and E)
G) A) and B)

Question 14

The cash coverage ratio directly measures the ability of a company to meet its obligation to pay:

Accepted Answer

A)   an invoice to a supplier.
B)   wages to an employee.
C)   interest to a lender.
D)   principal to a lender.
E)   a dividend to a shareholder.F) A) and E)
G) B) and D)

Question 15

Jensen's Shipping has total assets of $694,800 at year's end. The beginning owners' equity was $362,400. During the year, the company had sales of $711,000, a profit margin of 5.2 percent, a tax rate of 21 percent, and paid $12,500 in dividends. What is the equity multiplier at year-end?

Accepted Answer

A)   1.67
B)   1.72
C)   1.93
D)   1.80
E)   1.86F) A) and D)
G) B) and D)

Question 16

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio?

Accepted Answer

A)   2.12
B)   1.84
C)   1.39
D)   2.45
E)   2.69F) A) and E)
G) All of the above

Question 17

An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Accepted Answer

A)   Accounts payable
B)   Cash
C)   Inventory
D)   Accounts receivable
E)   Fixed assetsF) B) and D)
G) None of the above

Question 18

At the beginning of the year, Brick Makers had cash of $183, accounts receivable of $392, accounts payable of $463, and inventory of $714. At year end, cash was $167, accounts payables was $447, inventory was $682, and accounts receivable was $409. What is the amount of the net source or use of cash by working capital accounts for the year?

Accepted Answer

A)   Net use of $16 cash
B)   Net use of $17 cash
C)   Net source of $17 cash
D)   Net source of $15 cash
E)   Net use of $15 cashF) A) and E)
G) A) and D)

Question 19

The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level. Assume that both the cost per unit and the selling price per unit also remained constant. This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?

Accepted Answer

A)   Decrease in the inventory turnover rate
B)   Decrease in the net working capital turnover rate
C)   Increase in the fixed asset turnover rate
D)   Decrease in the day's sales in inventory
E)   Decrease in the total asset turnover rateF) A) and D)
G) A) and C)

Question 20

Oscar's Dog House has a profit margin of 5.6 percent, a return on assets of 12.5 percent, and an equity multiplier of 1.49. What is the return on equity?

Accepted Answer

A)   17.14 percent
B)   18.63 percent
C)   19.67 percent
D)   21.69 percent
E)   22.30 percentF) A) and B)
G) None of the above

Exam 3: Working with Financial Statements

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio?

Correct Answer
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According to the statement of cash flows, an increase in inventory will the cash flow from activities.

Correct Answer
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JK Motors has sales of $96,400, costs of $53,800, interest paid of $2,800, and depreciation of $7,100. The tax rate is 21 percent. What is the value of the cash coverage ratio?

Correct Answer
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Correct Answer
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The cash coverage ratio directly measures the ability of a company to meet its obligation to pay:

Correct Answer
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High Mountain Foods has an equity multiplier of 1.72, a total asset turnover of 1.16, and a profit margin of 4.5 percent. What is the return on assets?

Correct Answer
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Bernice's has $823,000 in sales. The profit margin is 4.2 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $16.50. What is the price-earnings ratio?

Correct Answer
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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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The price-sales ratio is especially useful when analyzing firms that have:

Correct Answer
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Green Yard Care has net income of $62,300, a tax rate of 21 percent, and a profit margin of 6.7 percent. Total assets are $1,100,500 and current assets are $328,200. How many dollars of sales are being generated from every dollar of net fixed assets?

Correct Answer
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Pittsburgh Motors has sales of $4,300, net income of $320, total assets of $4,800, and total equity of $2,950. Interest expense is $65. What is the common-size statement value of the interest expense?

Correct Answer
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Which one of the following statements is correct?

Correct Answer
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Gem Jewelers has current assets of $687,600, total assets of $1,711,000, net working capital of $223,700, and long-term debt of $450,000. What is the debt-equity ratio?

Correct Answer
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SS Stores has total debt of $4,910 and a debt-equity ratio of 0.52. What is the value of the total assets?

Correct Answer
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An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Correct Answer
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The Green Fiddle has current liabilities of $28,000, sales of $156,900, and cost of goods sold of $62,400. The current ratio is 1.22 and the quick ratio is .71. How many days on average does it take to sell the inventory?

Correct Answer
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Oscar's Dog House has a profit margin of 5.6 percent, a return on assets of 12.5 percent, and an equity multiplier of 1.49. What is the return on equity?

Correct Answer
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Jensen's Shipping has total assets of $694,800 at year's end. The beginning owners' equity was $362,400. During the year, the company had sales of $711,000, a profit margin of 5.2 percent, a tax rate of 21 percent, and paid $12,500 in dividends. What is the equity multiplier at year-end?

Correct Answer
verified

If a company produces a return on assets of 14 percent and also a return on equity of 14 percent, then the firm:

Correct Answer
verified

Exam 3: Working with Financial Statements

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio?

Correct AnswerverifiedShow Answer

According to the statement of cash flows, an increase in inventory will ________ the cash flow from ________ activities.

Correct AnswerverifiedShow Answer

JK Motors has sales of $96,400, costs of $53,800, interest paid of $2,800, and depreciation of $7,100. The tax rate is 21 percent. What is the value of the cash coverage ratio?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The cash coverage ratio directly measures the ability of a company to meet its obligation to pay:

Correct AnswerverifiedShow Answer

High Mountain Foods has an equity multiplier of 1.72, a total asset turnover of 1.16, and a profit margin of 4.5 percent. What is the return on assets?

Correct AnswerverifiedShow Answer

Bernice's has $823,000 in sales. The profit margin is 4.2 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $16.50. What is the price-earnings ratio?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The price-sales ratio is especially useful when analyzing firms that have:

Correct AnswerverifiedShow Answer

Green Yard Care has net income of $62,300, a tax rate of 21 percent, and a profit margin of 6.7 percent. Total assets are $1,100,500 and current assets are $328,200. How many dollars of sales are being generated from every dollar of net fixed assets?

Correct AnswerverifiedShow Answer

Pittsburgh Motors has sales of $4,300, net income of $320, total assets of $4,800, and total equity of $2,950. Interest expense is $65. What is the common-size statement value of the interest expense?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

Gem Jewelers has current assets of $687,600, total assets of $1,711,000, net working capital of $223,700, and long-term debt of $450,000. What is the debt-equity ratio?

Correct AnswerverifiedShow Answer

SS Stores has total debt of $4,910 and a debt-equity ratio of 0.52. What is the value of the total assets?

Correct AnswerverifiedShow Answer

An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Correct AnswerverifiedShow Answer

The Green Fiddle has current liabilities of $28,000, sales of $156,900, and cost of goods sold of $62,400. The current ratio is 1.22 and the quick ratio is .71. How many days on average does it take to sell the inventory?

Correct AnswerverifiedShow Answer

Oscar's Dog House has a profit margin of 5.6 percent, a return on assets of 12.5 percent, and an equity multiplier of 1.49. What is the return on equity?

Correct AnswerverifiedShow Answer

Jensen's Shipping has total assets of $694,800 at year's end. The beginning owners' equity was $362,400. During the year, the company had sales of $711,000, a profit margin of 5.2 percent, a tax rate of 21 percent, and paid $12,500 in dividends. What is the equity multiplier at year-end?

Correct AnswerverifiedShow Answer

If a company produces a return on assets of 14 percent and also a return on equity of 14 percent, then the firm:

Correct AnswerverifiedShow Answer

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According to the statement of cash flows, an increase in inventory will the cash flow from activities.

Correct Answer
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