Question 1

The Meat Market has $747,000 in sales.The profit margin is 4.1 percent and the firm has 7,500 shares of stock outstanding.The market price per share is $22.What is the price-earnings ratio?

Accepted Answer

A)  5.39
B)  8.98
C)  11.42
D)  13.15
E)  14.27F) All of the above
G) D) and E)

Question 2

A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908.How many dollars worth of sales are generated from every $1 in total assets?

Accepted Answer

A)  $1.08
B)  $1.14
C)  $1.19
D)  $1.26
E)  $1.30F) None of the above
G) A) and B)

Question 3

What is the return on equity for 2012?

Accepted Answer

A)  15.29 percent
B)  16.46 percent
C)  17.38 percent
D)  18.02 percent
E)  18.12 percentF) All of the above
G) C) and D)

Question 4

You need to analyze a firm's performance in relation to its peers.You can do this either by comparing the firms' balance sheets and income statements or by comparing the firms' ratios.If you only had time to use one means of comparison which method would you use and why?

Accepted Answer

Firms generally are sized differently ma...

Question 5

What is the quick ratio for 2012?

Accepted Answer

A)  0.52
B)  0.54
C)  1.32
D)  1.67
E)  1.79F) All of the above
G) C) and D)

Question 6

Beach Wear has current liabilities of $350,000, a quick ratio of 1.65, inventory turnover of 3.2, and a current ratio of 2.9.What is the cost of goods sold?

Accepted Answer

A)  $980,000
B)  $1,060,000
C)  $1,200,000
D)  $1,400,000
E)  $1,560,000F) C) and D)
G) A) and C)

Question 7

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) B) and E)
G) A) and D)

Question 8

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 E)

Question 9

The price-sales ratio is especially useful when analyzing firms that have which one of the following?

Accepted Answer

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

Question 10

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) B) and C)
G) A) and E)

Question 11

How many dollars of sales are being generated from every dollar of net fixed assets? (Use 2012 values.)

Accepted Answer

A)  $0.88
B)  $1.87
C)  $2.33
D)  $2.59
E)  $3.09F) C) and D)
G) D) and E)

Question 12

What is the equity multiplier for 2012?

Accepted Answer

A)  1.67
B)  1.72
C)  1.88
D)  1.93
E)  2.03F) A) and B)
G) D) and E)

Question 13

Dandelion Fields has a Tobin's Q of .96.The replacement cost of the firm's assets is $225,000 and the market value of the firm's debt is $101,000.The firm has 20,000 shares of stock outstanding and a book value per share of $2.09.What is the market to book ratio?

Accepted Answer

A)  2.75 times
B)  3.18 times
C)  3.54 times
D)  4.01 times
E)  4.20 timesF) B) and C)
G) All of the above

Question 14

Which one of the following is a use of cash?

Accepted Answer

A)  increase in notes payable
B)  decrease in inventory
C)  increase in long-term debt
D)  decrease in accounts receivables
E)  decrease in common stockF) D) and E)
G) A) and B)

Question 15

The Home Supply Co.has a current accounts receivable balance of $280,000.Credit sales for the year just ended were $1,830,000.How many days on average did it take for credit customers to pay off their accounts during this past year?

Accepted Answer

A)  54.29 days
B)  55.01 days
C)  55.50 days
D)  55.85 days
E)  61.00 daysF) A) and D)
G) C) and D)

Question 16

On the Statement of Cash Flows, which of the following are considered financing activities?
I.increase in long-term debt
II.decrease in accounts payable
III.interest paid
IV.dividends paid

Accepted Answer

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

Question 17

A firm currently has $600 in debt for every $1,000 in equity.Assume the firm uses some of its cash to decrease its debt while maintaining its current equity and net income.Which one of the following will decrease as a result of this action?

Accepted Answer

A)  equity multiplier
B)  total asset turnover
C)  profit margin
D)  return on assets
E)  return on equityF) C) and D)
G) A) and E)

Question 18

Activities of a firm which 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) C) and D)

Question 19

What is the return on equity? (Use 2012 values)

Accepted Answer

A)  14.26 percent
B)  15.38 percent
C)  15.64 percent
D)  19.96 percent
E)  20.14 percentF) All of the above
G) B) and C)

Question 20

A firm uses 2011 as the base year for its financial statements.The common-size, base-year statement for 2012 has an inventory value of 1.08.This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

Accepted Answer

A)  2011 inventory
B)  2011 total assets
C)  2012 total assets
D)  2011 inventory expressed as a percent of 2011 total assets
E)  2012 inventory expressed as a percent of 2012 total assetsF) B) and D)
G) C) and E)

Exam 3: Financial Statement Analysis

A firm has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908.How many dollars worth of sales are generated from every $1 in total assets?

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

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

Correct AnswerverifiedShow Answer

A firm uses 2011 as the base year for its financial statements.The common-size, base-year statement for 2012 has an inventory value of 1.08.This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

Correct AnswerverifiedShow Answer

Which one of the following is a use of cash?

Correct AnswerverifiedShow Answer

How many dollars of sales are being generated from every dollar of net fixed assets? (Use 2012 values.)

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You need to analyze a firm's performance in relation to its peers.You can do this either by comparing the firms' balance sheets and income statements or by comparing the firms' ratios.If you only had time to use one means of comparison which method would you use and why?

Correct AnswerverifiedFirms generally are sized differently ma...View AnswerShow 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

On the Statement of Cash Flows, which of the following are considered financing activities? I.increase in long-term debt II.decrease in accounts payable III.interest paid IV.dividends paid

Correct AnswerverifiedShow Answer

What is the return on equity for 2012?

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

The Meat Market has $747,000 in sales.The profit margin is 4.1 percent and the firm has 7,500 shares of stock outstanding.The market price per share is $22.What is the price-earnings ratio?

Correct AnswerverifiedShow Answer

What is the equity multiplier for 2012?

Correct AnswerverifiedShow Answer

The Home Supply Co.has a current accounts receivable balance of $280,000.Credit sales for the year just ended were $1,830,000.How many days on average did it take for credit customers to pay off their accounts during this past year?

Correct AnswerverifiedShow Answer

A firm currently has $600 in debt for every $1,000 in equity.Assume the firm uses some of its cash to decrease its debt while maintaining its current equity and net income.Which one of the following will decrease as a result of this action?

Correct AnswerverifiedShow Answer

What is the return on equity? (Use 2012 values)

Correct AnswerverifiedShow Answer

Beach Wear has current liabilities of $350,000, a quick ratio of 1.65, inventory turnover of 3.2, and a current ratio of 2.9.What is the cost of goods sold?

Correct AnswerverifiedShow Answer

The price-sales ratio is especially useful when analyzing firms that have which one of the following?

Correct AnswerverifiedShow Answer

What is the quick ratio for 2012?

Correct AnswerverifiedShow Answer

Dandelion Fields has a Tobin's Q of .96.The replacement cost of the firm's assets is $225,000 and the market value of the firm's debt is $101,000.The firm has 20,000 shares of stock outstanding and a book value per share of $2.09.What is the market to book ratio?

Correct AnswerverifiedShow Answer

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Firms generally are sized differently ma...
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