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One of the biggest impediments to a global capital market is _________.


A) volatile exchange rates
B) the lack of common accounting standards
C) lower disclosure standards in the U.S. than abroad
D) the lack of transparent reporting standards across the EU

E) A) and B)
F) A) and C)

Correct Answer

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B

The financial statements of Burnaby Mountain Trading Company are given below. The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's return on sales ratio for 2008 is _________. A) 0.0409 B) 0.0429 C) 0.0475 D) 0.0753 Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's return on sales ratio for 2008 is _________.


A) 0.0409
B) 0.0429
C) 0.0475
D) 0.0753

E) B) and C)
F) A) and D)

Correct Answer

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Which of the following is not one of the three key financial statements available to investors in publicly traded firms?


A) Income statement
B) Balance sheet
C) Statement of operating earnings
D) Statement of cash flows

E) B) and C)
F) A) and D)

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The financial statements of Flathead Lake Manufacturing Company are given below: The financial statements of Flathead Lake Manufacturing Company are given below: Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The firm's inventory turnover ratio is _________.Please keep in mind that when a ratio involves both income statement and balance sheet numbers,the balance sheet numbers for the beginning and end of the year must be averaged. A) 11.6 B) 10.2 C) 9.5 D) 7.7 Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The firm's inventory turnover ratio is _________.Please keep in mind that when a ratio involves both income statement and balance sheet numbers,the balance sheet numbers for the beginning and end of the year must be averaged.


A) 11.6
B) 10.2
C) 9.5
D) 7.7

E) A) and D)
F) A) and C)

Correct Answer

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Benjamin Graham thought that the benefits from detailed analysis of a firm's financial statements had _________ over his long professional life.


A) increased greatly
B) increased slightly
C) remained constant
D) decreased

E) A) and B)
F) A) and C)

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Cost of goods sold refers to ___________.


A) direct costs attributable to producing the product sold by the firm
B) salaries, advertising and selling expenses
C) payments to the firm's creditors
D) payments to federal and local governments

E) C) and D)
F) A) and C)

Correct Answer

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The financial statements of Flathead Lake Manufacturing Company are given below: The financial statements of Flathead Lake Manufacturing Company are given below: Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The firm's compound leverage ratio is __________.Please keep in mind that when a ratio involves both income statement and balance sheet numbers,the balance sheet numbers for the beginning and end of the year must be averaged. A) 1.5 B) 2.0 C) 2.5 D) 3.0 Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The firm's compound leverage ratio is __________.Please keep in mind that when a ratio involves both income statement and balance sheet numbers,the balance sheet numbers for the beginning and end of the year must be averaged.


A) 1.5
B) 2.0
C) 2.5
D) 3.0

E) C) and D)
F) A) and C)

Correct Answer

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The financial statements of Burnaby Mountain Trading Company are given below. The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's times interest earned ratio for 2008 is _________. A) 2.80 B) 6.00 C) 9.00 D) 11.11 Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's times interest earned ratio for 2008 is _________.


A) 2.80
B) 6.00
C) 9.00
D) 11.11

E) None of the above
F) A) and B)

Correct Answer

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B

The financial statements of Burnaby Mountain Trading Company are given below. The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's market-to-book-value for 2008 is _________. A) 0.1708 B) 0.1529 C) 0.1462 D) 0.1636 Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's market-to-book-value for 2008 is _________.


A) 0.1708
B) 0.1529
C) 0.1462
D) 0.1636

E) C) and D)
F) A) and C)

Correct Answer

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All of the following ratios are related to efficiency except for _______.


A) total asset turnover
B) fixed asset turnover
C) average collection period
D) cash ratio

E) B) and D)
F) B) and C)

Correct Answer

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A firm purchases goods on credit worth $150.The same firm pays off $100 in old credit purchases.An investment is made via the purchase of a new facility and equity is issued in the amount of $300 to pay for the purchase.What is the change in net cash provided by operations?


A) $50 increase
B) $100 increase
C) $150 increase
D) $250 increase

E) All of the above
F) A) and D)

Correct Answer

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A firm has a compound leverage factor greater than 1 indicates that ______.


A) this firm has no interest payments
B) this firm uses less debt as a percentage of financing
C) its interest payments are equal to the firm's pretax profits
D) its debt has a positive contribution to the firm's ROA

E) C) and D)
F) None of the above

Correct Answer

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The highest possible value for the interest burden ratio is ______ and this occurs when the firm _________.


A) 0; uses as much debt as possible
B) 1; uses debt to the point where ROA = interest cost of debt
C) 1; uses no interest bearing debt
D) -1; pays down its existing debts

E) All of the above
F) B) and C)

Correct Answer

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The financial statements of Flathead Lake Manufacturing Company are given below: The financial statements of Flathead Lake Manufacturing Company are given below: Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.In 2007 Flathead generated ______ of EBIT for every dollar of sales. A) $0.075 B) $0.086 C) $0.092 D) $0.099 Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.In 2007 Flathead generated ______ of EBIT for every dollar of sales.


A) $0.075
B) $0.086
C) $0.092
D) $0.099

E) All of the above
F) B) and C)

Correct Answer

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The financial statements of Burnaby Mountain Trading Company are given below. The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's leverage ratio for 2008 is _________. A) 1.30 B) 1.50 C) 1.69 D) 2.83 Note: The common shares are trading in the stock market for $27 each. -Refer to the financial statements of Burnaby Mountain Trading Company.The firm's leverage ratio for 2008 is _________.


A) 1.30
B) 1.50
C) 1.69
D) 2.83

E) A) and B)
F) C) and D)

Correct Answer

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Use the following cash flow data of Haven Hardware for the year ended December 31, 2008. Use the following cash flow data of Haven Hardware for the year ended December 31, 2008. -What is the net cash provided by or used in investing activities of Haven Hardware? A) ($12,000) B) ($62,000) C) $12,000 D) $164,000 -What is the net cash provided by or used in investing activities of Haven Hardware?


A) ($12,000)
B) ($62,000)
C) $12,000
D) $164,000

E) A) and B)
F) B) and C)

Correct Answer

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The financial statements of Flathead Lake Manufacturing Company are given below: The financial statements of Flathead Lake Manufacturing Company are given below: Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The firm's debt to equity ratio for 2007 is _________. A) 2.13 B) 2.44 C) 2.56 D) 2.89 Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The firm's debt to equity ratio for 2007 is _________.


A) 2.13
B) 2.44
C) 2.56
D) 2.89

E) A) and B)
F) All of the above

Correct Answer

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C

The financial statements of Flathead Lake Manufacturing Company are given below: The financial statements of Flathead Lake Manufacturing Company are given below: Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The industry average ACP is 32 days.How is Flathead doing in its collections relative to the industry? (Please keep in mind that when a ratio involves both income statement and balance sheet numbers,the balance sheet numbers for the beginning and end of the year must be averaged.) A) Flathead's receivables are outstanding about 9 fewer days than the industry average. B) Flathead's receivables are outstanding about 15 fewer days than the industry average. C) Flathead's receivables are outstanding about 12 more days than the industry average. D) Flathead's receivables are outstanding about 6 more days than the industry average. Note: The common shares are trading in the stock market for $15 per share -Refer to the financial statements of Flathead Lake Manufacturing Company.The industry average ACP is 32 days.How is Flathead doing in its collections relative to the industry? (Please keep in mind that when a ratio involves both income statement and balance sheet numbers,the balance sheet numbers for the beginning and end of the year must be averaged.)


A) Flathead's receivables are outstanding about 9 fewer days than the industry average.
B) Flathead's receivables are outstanding about 15 fewer days than the industry average.
C) Flathead's receivables are outstanding about 12 more days than the industry average.
D) Flathead's receivables are outstanding about 6 more days than the industry average.

E) A) and B)
F) B) and C)

Correct Answer

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Use the following cash flow data of Haven Hardware for the year ended December 31, 2008. Use the following cash flow data of Haven Hardware for the year ended December 31, 2008. -What is the net increase or decrease in cash for Haven Hardware for 2008? A) ($94,000) B) ($88,000) C) $88,000 D) $188,000 -What is the net increase or decrease in cash for Haven Hardware for 2008?


A) ($94,000)
B) ($88,000)
C) $88,000
D) $188,000

E) B) and C)
F) A) and B)

Correct Answer

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A firm has a P/E ratio of 24 and a ROE of 12%.Its market-to-book-value ratio is _________.


A) 2.88
B) 2.00
C) 1.75
D) 0.69

E) C) and D)
F) A) and B)

Correct Answer

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