Question 1

The Harrisburg Store 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)   $84
E)   $93F) B) and D)
G) A) and C)

Question 2

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as ________ ratios.

Accepted Answer

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

Question 3

Corner Books has a debt-equity ratio of .57. What is the total debt ratio?

Accepted Answer

A)   0.36
B)   0.30
C)   0.44
D)   2.27
E)   2.75F) All of the above
G) B) and D)

Question 4

The U.S. government coding system that classifies a company by the nature of its business operations is known as the:

Accepted Answer

A)   Centralized Business Index.
B)   Peer Grouping codes.
C)   Standard Industrial Classification codes.
D)   Governmental ID codes.
E)   Government Engineered Coding System.F) A) and B)
G) C) and D)

Question 5

Which one of the following statements is correct?

Accepted Answer

A)   If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0.
B)   Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5.
C)   The debt-equity ratio can be computed as 1 plus the equity multiplier.
D)   An equity multiplier of 1.2 means a firm has $1.20 in sales for every $1 in equity.
E)   An increase in the depreciation expense will not affect the cash coverage ratio.F) All of the above
G) A) and B)

Question 6

Frank's Used Cars has sales of $807,200, total assets of $768,100, and a profit margin of 6.68 percent. The firm has a total debt ratio of 54 percent. What is the return on equity?

Accepted Answer

A)   13.09 percent
B)   12.04 percent
C)   11.03 percent
D)   8.56 percent
E)   15.26 percentF) B) and D)
G) A) and C)

Question 7

All of the following issues represent problems encountered when comparing the financial statements of two separate entities except the issue of the companies:

Accepted Answer

A)   being conglomerates with unrelated lines of business.
B)   having geographically varying operations.
C)   using differing accounting methods.
D)   differing seasonal peaks.
E)   having the same fiscal year.F) D) and E)
G) B) and C)

Question 8

Best-Ever Chicken has a debt-equity ratio of .94. Return on assets is 8.5 percent, and total equity is $520,000. What is the net income?

Accepted Answer

A)   $44,200
B)   $88,880
C)   $85,748
D)   $41,548
E)   $74,909F) C) and E)
G) B) and E)

Question 9

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Accepted Answer

A)   Return on equity
B)   Return on assets
C)   Profit margin
D)   Total asset turnover
E)   Price-earnings ratioF) None of the above
G) A) and E)

Question 10

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time?

Accepted Answer

A)   Statement of standardization
B)   Statement of cash flows
C)   Common-base year statement
D)   Common-size statement
E)   Base reconciliation statementF) All of the above
G) A) and C)

Question 11

Terry's Pets paid $2,380 in interest and $2,200 in dividends last year. The times interest earned ratio is 2.6 and the depreciation expense is $680. What is the value of the cash coverage ratio?

Accepted Answer

A)   1.42
B)   2.72
C)   2.94
D)   2.89
E)   2.46F) All of the above
G) C) and E)

Question 12

The Docksider has net income for the most recent year of $24,650 and a combined tax rate of 24 percent. The firm paid $1,800 in total interest expense and deducted $2,900 in depreciation expense. What was the cash coverage ratio for the year?

Accepted Answer

A)   20.48 times
B)   11.48 times
C)   19.39 times
D)   20.63 times
E)   13.69 timesF) A) and B)
G) B) and E)

Question 13

Drive-Up has sales of $31.4 million, total assets of $27.6 million, and total debt of $14.9 million. The profit margin is 3.7 percent. What is the return on equity?

Accepted Answer

A)   6.85 percent
B)   9.15 percent
C)   11.08 percent
D)   13.31 percent
E)   14.21 percentF) A) and B)
G) A) and C)

Question 14

For the past year, Jenn's Floral Arrangements had taxable income of $198,600, beginning common stock of $68,000, beginning retained earnings of $318,750, ending common stock of $71,500, ending retained earnings of $316,940, interest expense of $11,300, and a tax rate of 21 percent. What is the amount of dividends paid during the year?

Accepted Answer

A)   $157,280
B)   $159,935
C)   $163,200
D)   $153,555
E)   $158,704F) B) and E)
G) A) and D)

Question 15

Which one of the following accurately describes the three parts of the DuPont identity?

Accepted Answer

A)   Equity multiplier, profit margin, and total asset turnover
B)   Debt-equity ratio, capital intensity ratio, and profit margin
C)   Operating efficiency, equity multiplier, and profitability ratio
D)   Return on assets, profit margin, and equity multiplier
E)   Financial leverage, operating efficiency, and profitability ratioF) None of the above
G) A) and B)

Question 16

A supplier, who requires payment within 10 days, should be most concerned with which one of the following ratios when granting credit?

Accepted Answer

A)   Current
B)   Cash
C)   Debt-equity
D)   Quick
E)   Total debtF) B) and D)
G) D) and E)

Question 17

Nielsen's has inventory of $29,406, accounts receivable of $46,215, net working capital of $4,507, and accounts payable of $48,919. What is the quick ratio?

Accepted Answer

A)   1.55
B)   0.49
C)   1.32
D)   0.94
E)   0.92F) A) and B)
G) A) and C)

Question 18

Corner Books has sales of $687,400, cost of goods sold of $454,200, and a profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share?

Accepted Answer

A)   4.28
B)   12.74
C)   6.12
D)   4.07
E)   14.51F) B) and C)
G) A) and D)

Question 19

Which one of the following is a source of cash?

Accepted Answer

A)   Repurchase of common stock
B)   Acquisition of debt
C)   Purchase of inventory
D)   Payment to a supplier
E)   Granting credit to a customerF) B) and D)
G) C) and D)

Question 20

Uptown Men's Wear has accounts payable of $2,214, inventory of $7,950, cash of $1,263, fixed assets of $8,400, accounts receivable of $3,907, and long-term debt of $4,200. What is the value of the net working capital to total assets ratio?

Accepted Answer

A)   0.31
B)   0.42
C)   0.47
D)   0.51
E)   0.56F) A) and E)
G) None of the above

Exam 3: Working with Financial Statements

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time?

Correct Answer
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Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Correct Answer
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Correct Answer
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Terry's Pets paid $2,380 in interest and $2,200 in dividends last year. The times interest earned ratio is 2.6 and the depreciation expense is $680. What is the value of the cash coverage ratio?

Correct Answer
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Uptown Men's Wear has accounts payable of $2,214, inventory of $7,950, cash of $1,263, fixed assets of $8,400, accounts receivable of $3,907, and long-term debt of $4,200. What is the value of the net working capital to total assets ratio?

Correct Answer
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Frank's Used Cars has sales of $807,200, total assets of $768,100, and a profit margin of 6.68 percent. The firm has a total debt ratio of 54 percent. What is the return on equity?

Correct Answer
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The Docksider has net income for the most recent year of $24,650 and a combined tax rate of 24 percent. The firm paid $1,800 in total interest expense and deducted $2,900 in depreciation expense. What was the cash coverage ratio for the year?

Correct Answer
verified

Drive-Up has sales of $31.4 million, total assets of $27.6 million, and total debt of $14.9 million. The profit margin is 3.7 percent. What is the return on equity?

Correct Answer
verified

All of the following issues represent problems encountered when comparing the financial statements of two separate entities except the issue of the companies:

Correct Answer
verified

Which one of the following accurately describes the three parts of the DuPont identity?

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
verified

Nielsen's has inventory of $29,406, accounts receivable of $46,215, net working capital of $4,507, and accounts payable of $48,919. What is the quick ratio?

Correct Answer
verified

A supplier, who requires payment within 10 days, should be most concerned with which one of the following ratios when granting credit?

Correct Answer
verified

The Harrisburg Store 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 Answer
verified

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as ________ ratios.

Correct Answer
verified

Corner Books has a debt-equity ratio of .57. What is the total debt ratio?

Correct Answer
verified

Corner Books has sales of $687,400, cost of goods sold of $454,200, and a profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share?

Correct Answer
verified

Best-Ever Chicken has a debt-equity ratio of .94. Return on assets is 8.5 percent, and total equity is $520,000. What is the net income?

Correct Answer
verified

Which one of the following is a source of cash?

Correct Answer
verified

The U.S. government coding system that classifies a company by the nature of its business operations is known as the:

Correct Answer
verified

Exam 3: Working with Financial Statements

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time?

Correct AnswerverifiedShow Answer

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Terry's Pets paid $2,380 in interest and $2,200 in dividends last year. The times interest earned ratio is 2.6 and the depreciation expense is $680. What is the value of the cash coverage ratio?

Correct AnswerverifiedShow Answer

Uptown Men's Wear has accounts payable of $2,214, inventory of $7,950, cash of $1,263, fixed assets of $8,400, accounts receivable of $3,907, and long-term debt of $4,200. What is the value of the net working capital to total assets ratio?

Correct AnswerverifiedShow Answer

Frank's Used Cars has sales of $807,200, total assets of $768,100, and a profit margin of 6.68 percent. The firm has a total debt ratio of 54 percent. What is the return on equity?

Correct AnswerverifiedShow Answer

The Docksider has net income for the most recent year of $24,650 and a combined tax rate of 24 percent. The firm paid $1,800 in total interest expense and deducted $2,900 in depreciation expense. What was the cash coverage ratio for the year?

Correct AnswerverifiedShow Answer

Drive-Up has sales of $31.4 million, total assets of $27.6 million, and total debt of $14.9 million. The profit margin is 3.7 percent. What is the return on equity?

Correct AnswerverifiedShow Answer

All of the following issues represent problems encountered when comparing the financial statements of two separate entities except the issue of the companies:

Correct AnswerverifiedShow Answer

Which one of the following accurately describes the three parts of the DuPont identity?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

Nielsen's has inventory of $29,406, accounts receivable of $46,215, net working capital of $4,507, and accounts payable of $48,919. What is the quick ratio?

Correct AnswerverifiedShow Answer

A supplier, who requires payment within 10 days, should be most concerned with which one of the following ratios when granting credit?

Correct AnswerverifiedShow Answer

The Harrisburg Store 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

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as ________ ratios.

Correct AnswerverifiedShow Answer

Corner Books has a debt-equity ratio of .57. What is the total debt ratio?

Correct AnswerverifiedShow Answer

Corner Books has sales of $687,400, cost of goods sold of $454,200, and a profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share?

Correct AnswerverifiedShow Answer

Best-Ever Chicken has a debt-equity ratio of .94. Return on assets is 8.5 percent, and total equity is $520,000. What is the net income?

Correct AnswerverifiedShow Answer

Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

The U.S. government coding system that classifies a company by the nature of its business operations is known as the:

Correct AnswerverifiedShow Answer

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