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The Inside Door has total debt of $78,600,total equity of $214,000,and a return on equity of 14.5 percent.What is the return on assets?


A) 9.14 percent
B) 10.61 percent
C) 21.45 percent
D) 34.61 percent
E) 39.48 percent

F) D) and E)
G) B) and D)

Correct Answer

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The DuPont identity can be totally defined by which one of the following?


A) Return on equity, total asset turnover, and equity multiplier
B) Equity multiplier and return on assets
C) Profit margin and return on equity
D) Total asset turnover, profit margin, and debt-equity ratio
E) Equity multiplier, return on assets, and profit margin

F) A) and D)
G) B) and C)

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Which one of the following transactions will increase the liquidity of a firm?


A) Cash purchase of new production equipment
B) Payment of an account payable
C) Cash purchase of inventory
D) Credit sale of inventory at cost
E) Cash payment of employee wages

F) B) and D)
G) D) and E)

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D

Which one of the following is the abbreviation for the U.S.government coding system that classifies a firm by its specific type of business operations?


A) BEC
B) SED
C) BID
D) SIC
E) SBC

F) B) and E)
G) A) and B)

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A firm has total assets of $523,100,current assets of $186,500,current liabilities of $141,000,and total debt of $215,000.What is the debt-equity ratio?


A) 0.48
B) 0.70
C) 1.10
D) 1.43
E) 2.13

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

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B

Mike's Place has total assets of $123,800,a debt-equity ratio of 0.75,and net income of $7,100.What is the return on equity?


A) 3.48 percent
B) 3.73 percent
C) 5.74 percent
D) 10.04 percent
E) 13.61 percent

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

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Gently Used Goods has cash of $2,950,inventory of $28,470,fixed assets of $9,860,accounts payable of $11,900,and accounts receivable of $4,660.What is the cash ratio?


A) 0.08
B) 0.25
C) 0.30
D) 0.46
E) 0.51

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

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A firm has adopted a policy whereby it will not seek any additional external financing.Given this,what is the maximum growth rate for the firm if it has net income of $12,100,total equity of $94,000,total assets of $156,000,and a 40 percent dividend payout ratio?


A) 4.88 percent
B) 5.11 percent
C) 6.62 percent
D) 7.67 percent
E) 8.37 percent

F) All of the above
G) A) and C)

Correct Answer

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A

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000.What is the equity multiplier?


A) 0.46
B) 0.54
C) 1.21
D) 1.85
E) 2.17

F) A) and B)
G) C) and D)

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You would like to borrow money three years from now to build a new building.In preparation for applying for that loan,you are in the process of developing target ratios for your firm.Which set of ratios represents the best target mix considering that you want to obtain outside financing in the relatively near future?


A) Times interest earned = 1.7; debt-equity ratio = 1.6
B) Times interest earned = 1.5; debt-equity ratio = 1.2
C) Cash coverage ratio = 0.8; debt-equity ratio = 0.8
D) Cash coverage ratio = 2.6; debt-equity ratio = 0.3
E) Cash coverage ratio = 0.5; total debt ratio = 0.2

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

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Eric & Jared's Department Store has current liabilities of $7,630,net working capital of $2,180,inventory of $2,750,and sales of $51,800.What is the quick ratio?


A) 0.79
B) 0.84
C) 0.93
D) 1.09
E) 3.50

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

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A common-size balance sheet helps financial managers determine:


A) which customers are paying on a timely basis.
B) if costs are increasing faster or slower than sales.
C) if changes are occurring in a firm's mix of assets.
D) if a firm is generating more or less sales per dollar of assets than in prior years.
E) the rate at which the firm's dividends are changing.

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

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Blooming Gardens has an inventory turnover of 16.This means the firm:


A) sells its entire inventory every 16 days.
B) stocks its inventory only every 16 days.
C) buys 16 days of inventory with each order.
D) sells its inventory by granting customers 16 days' credit.
E) sells its inventory an average of 16 times each year.

F) C) and E)
G) B) and E)

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The Veggie Hut has net income of $26,400,total equity of $102,700,and total assets of $189,500.The dividend payout ratio is 0.30.What is the internal growth rate?


A) 7.99 percent
B) 8.57 percent
C) 10.81 percent
D) 16.87 percent
E) 21.94 percent

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

Correct Answer

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Tally Ho Inn has annual sales of $737,000.Earnings before interest and taxes is equal to 21 percent of sales.For the period,the firm paid $7,900 in interest.What is the profit margin if the tax rate is 35 percent?


A) 12.46 percent
B) 12.95 percent
C) 13.33 percent
D) 15.29 percent
E) 16.11 percent

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

Correct Answer

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The DuPont identity can be used to help a financial manager determine the: I.degree of financial leverage used by a firm. II.operating efficiency of a firm. III.utilization rate of a firm's assets. IV.rate of return on a firm's assets.


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

F) A) and B)
G) A) and C)

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A firm has sales of $311,000 and net income of $31,600.Currently,there are 28,000 shares outstanding at a market price of $36 per share.What is the price-sales ratio?


A) 2.08
B) 3.24
C) 4.26
D) 5.15
E) 11.11

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

Correct Answer

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You are analyzing a company that has cash of $11,200,accounts receivable of $27,800,fixed assets of $124,600,accounts payable of $31,300,and inventory of $56,900.What is the quick ratio?


A) 0.30
B) 0.67
C) 0.80
D) 1.25
E) 1.37

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

Correct Answer

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Blue Water Cafe has $28,700 in total assets,depreciation of $3,100,and interest of $1,400.The total asset turnover rate is 1.2.Earnings before interest and taxes are equal to 28 percent of sales.What is the cash coverage ratio?


A) 6.33
B) 7.51
C) 9.10
D) 10.23
E) 10.98

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

Correct Answer

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Friendly Skies Airline has earnings before interest and taxes of $21,680 and net income of $12,542.The tax rate is 35 percent.What is the times interest earned ratio?


A) 0.88
B) 1.73
C) 3.09
D) 5.59
E) 9.09

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

Correct Answer

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