3580340
Description
Quiz by rainierdeocampo, updated more than 1 year ago
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Created by rainierdeocampo
about 9 years ago
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Question 1
Question
The assets on the balance sheet produce the income of the firm.
Answer
- True
- False
Question 2
Question
In common-sized financial statements each item is expressed as either a percentage of total assets or total liabilities.
Answer
- True
- False
Question 3
Question
The greater the debt ratio, the less risky a firm is.
Answer
- True
- False
Question 4
Question
In general, a firm's inventory is its most liquid possession.
Answer
- True
- False
Question 5
Question
Gary's Garage has an inventory turnover ratio that is twice the industry's ratio. It is safe to assume Gary's Garage is a profitable firm.
Answer
- True
- False
Question 6
Question
When ratios of differing years are being compared, inflation should be taken into consideration.
Answer
- True
- False
Question 7
Question
If the net working capital is negative, current liabilities exceed current assets.
Answer
- True
- False
Question 8
Question
The accounts receivable turnover ratio is often called the days sales in receivables.
Answer
- True
- False
Question 9
Question
A P/E ratio of 30 indicates that investors are willing to pay $30 for each $1 of earnings.
Answer
- True
- False
Question 10
Question
When referring to ratio comparisons, time-series analysis compares a firm to that (word?) industry leader.
Answer
- True
- False
Question 11
Question
The liquidity of a business firm refers to the solvency of the firm's overall financial position.
Answer
- True
- False
Question 12
Question
Total assets turnover commonly measures the liquidity of a firm's total assets.
Answer
- True
- False
Question 13
Question
The less fixed-cost debt, or financial leverage, a firm uses, the greater will be its risk and return.
Answer
- True
- False
Question 14
Question
The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days' sales inventory.
Answer
- True
- False
Question 15
Question
Both present and prospective shareholders are intersected in the firm's current and future level of risk and return. These two dimensions directly affect share price.
Answer
- True
- False
Question 16
Question
If Lacey Corporation has total shares of $750,000, one-half of which are credit sales. If the balance sheet reports accounts receivable of $52,369, what is Lacey's average collection period?
Answer
-
a) 50 days
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b) 35 days
-
c) 182 days
-
d) not enough information
Question 17
Question
A firm's fixed assets are termed as its ________ assets.
Answer
-
a) earning
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b) equity
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c) short-term
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d) variable
Question 18
Question
_______________ refers to the solvency of the firm's overall financial position, the ease with which it can pay bills.
Answer
-
a) Coverage
-
b) Leverage
-
c) Liquidity
-
d) Turnover
Question 19
Question
_________ ratios measure the ability to convert assets to cash
Answer
-
a) Liquidity
-
b) Management
-
c) Profitability
-
d) Activity
Question 20
Question
Terry's Tire Company has earnings before taxes of $1.43 million. It has 275,000 of common stock outstanding. The tax rate is 40$. What is Terry's EPS?
Answer
-
a) $5.20
-
b) $3.12
-
c) $2.08
-
d) $3.25
Question 21
Question
The _________ ratio measures the firm's ability to meet interest payments.
Answer
-
a) times interest earned
-
b) debt ratio
-
c) debt-equity
-
d) quick ratio
Question 22
Question
Sales are $3 million and total asset turner is 1.70. What are the firm's total assets?
Answer
-
a) $2,500,000
-
b) $2,142,857
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c) $1,764,706
-
d) $1,875,000
Question 23
Question
The Du Pont Analysis allows firms to break their return on equity down into all of the following except:
Answer
-
a) use of leverage
-
b) inventory usage
-
c) efficiency of asset usage
-
d) net profit in sales
Question 24
Question
In 1998, sales were $363,000 with a gross margin of $64,000. On January 1, the firm had $107,000 in inventory and $36,000 on December 31. What is the firm's inventory turnover?
Answer
-
a) 3.39
-
b) 4.18
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c) .90
-
d) 5.08
Question 25
Question
All of the following should be used to analyze a firm except:
Answer
-
a) Perform a trend analysis
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b) Analyze a firm's ratios with competitors
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c) Perform a terminal cash flow
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d) Analyze a firm's strengths and weaknesses
Question 26
Question
Ratio provide a ________ measure of a company's performance and condition.
Answer
-
a) definitive
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b) gross
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c) relative
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d) qualitative
Question 27
Question
Pne means to negate the effect of inflation on ratio analysis is to value the fixed assets at:
Answer
-
a) book value
-
b) liquidation value
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c) replacement value
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d) depreciation
Question 28
Question
The _________ ratio provides the information critical to the long-run operation of the firm.
Answer
-
a) liquidity
-
b) activity
-
c) debt
-
d) profitability
Question 29
Question
A decrease in total asset turnover will result in _____________ in the return on equity.
Answer
-
a) an increase
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b) no change
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c) a decrease
-
d) an undetermined change
Question 30
Question
______________ is used by financial managers as a structure of dissecting the firm's financial statements to assess its financial condition.
Answer
-
a) Statement of Cash Flow
-
b) Common-size income statement
-
c) The Du Pont system of analysis
-
d) Cross-sectional analysis
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