FIN 315 CHAPTER 3
WHICH OF THE FOLLOWING ARE SOURCES OF CASH
1) A DECREASE IN ACCOUNTS RECEIVABLE 2) AN INCREASE IN NOTES PAYABLE
THE CASH RATIO IS FOUND BY DIVIDED CASH BY
CURRENT LIABILITIES
A TIMES INTEREST EARNED TIE RATIO OF 3.5 TIMES MEANS A FIRMS HAS___ THAT ARE 3.5 TIMES GREATER THAN THE FIRMS INTEREST EXPENSE
EARNINGS BEFORE INTEREST AND TAXES
IF A COMPANY HAS INVENTORY, THE QUICK RATIO WILL ALWAYS BE___ THE CURRENT RATIO
LESS THAN
WHENEVER___ INFORMATION IS AVAILABLE, IT SHOULD BE USED INSTEAD OF ACCOUNTING DATA
MARKET
RETURN ON ASSETS IS A MEASURE OF
PROFITABILITY
IF A COMPANY COMMON SIZE INCOME STATEMENT SHOWS A LOWER PERCENTAGE FOR COSTS OF GOODS SOLD THIS PERIOD COMPARED TO LAST PERIOD THE COMPANY MAY BE CONTROLLING ITS COSTS WELL OR IT HAS___
RAISED ITS PRICE RELATIVE TO COSTS
FINANCIAL MANAGERS USE COMMON SIZE INCOME STATEMENTS TO DETERMINE
WHICH COSTS ARE RISING OR FALLING AS A PERCENTAGE OF SALES
WHICH OF THESE COMPUTES DAYS SALES IN RECEIVABLES
365/RECEIVABLES TURNOVER
AN IMPORTANT ACCOUNTING GOAL IS TO REPORT FINANCIAL INFORMATION TO USERS IN A WAY THAT IS USEFUL FOR___
DECISION MAKING
A COMMON BASE YEAR FINANCIAL STATEMENTS PRESENTS ITEMS RELATIVE TO A CERTAIN BASE WHICH IS THE
DOLLAR AMOUNT OF EACH ITEM DURING A COMMON BASE YEAR
WHENEVER___ INFORMATION IS AVAILABLE IT SHOULD BE USED INSTEAD OF ACCOUNTING DATA
MARKET
THE PRICE EARNINGS PE RATIO IS A___ RATIO
MARKET VALUE
WHICH OF THE FOLLOWING ITEMS ARE AMONG THE ITEMS USED TO COMPUTE THE CURRENT RATIO
1) CASH 2) ACCOUNTS PAYABLE
THE INVENTORY RATIOS FOR PROCTOR AND GAMBLE OVER THE PAST THREE YEARS ARE 5.09, 5.72 AND 5.92 TIMES RESPECTIVELY. EXPLAINING THE UPWARD TREND IN THE INVENTORY TURNOVER RATIO REQURIRES
1) EXAMINING WHETHER THE TREND IS BECAUSE OF INCREASED SALES OR DECREASED INVENTORY 2) FURTHER INVESTIGATION
WHICH OF THE FOLLOWING ARE USES OF CASH
1) INCREASE IN PROPERTY, PLANT AND EQUIPMENT 2)INCREASE IN INVENTORY 3)DECREASE IN ACCOUNTS PAYABLE
WHICH OF THE FOLLOWING ARE TRADITIONAL FINANCIAL RATIO CATAGORIES
1) PROFITABILITY RATIOS 2) ASSET MANAGEMENT RATIOS 3)MARKET VALUE RATIOS
WHICH TWO OF THE FOLLOWING ARE MOST LIKELY TO CREATE PROBLEMS WHEN COMPARING FINANCIAL STATEMENTS FOR MULTIPLE FIRMS
1)DIFFERING FISCAL YEARS 2)DIFFERING ACCOUNTING METHODS
WHICH TWO OF THE FOLLOWING GROUPS ARE MOST INTERESTED IN LIQUIDITY RATIOS
1)SUPPLIERS 2)BANKERS
VERA HAS EARNINGS PER SHARE OF $3 AND DIVIDENDS PER SHARE OF 1.20 THE STOCK SELLS FOR $30 A SHARE. WHAT IS THE PE RATIO
10 TIMES
OMEGA CO. HAS ANNUAL SALES OF 250000 COST OF GOODS SOLD 168000 AND ASSETS OF 322000 ACCOUNTS RECEIVABLE ARE 86200 WHAT IS THE RECEIVABLES TURNOVER
2.90
ALPHA CO HAS COST OF GOODS SOLD 77 MILLION NET INCOME OF 9.6 MILLION AND SALES OF 120 MILLION AND TOTAL ASSETS OF 150 MILLION. A COMMON SIZE INCOME STATEMENT WILL SHOW COST OF GOODS SOLD OF ___PERCENT AND A NET PROFIT OF ___ PERCENT
64.2;8.0
BC CORPORATION HAS NET INCOME OF $176,000 SALES OF $1982000 AND TOTAL ASSETS 2.24 MILLION. WHAT IS THE RETURN ON ASSETS
7.86
HOW ARE FIRMS CLASSIFIED INTO PEER GROUPS FOR RATIO ANALYSIS
ACCORDING TO STANDARD INDUSTRIAL CLASSIFICATIONS CODES
PROFITABILITY MEASURE SUCH AS ROA AND ROE ARE ___RATES OF RETURN
ACCOUNTING
ALTHOUGH___ ___ ARE OFTEN POOR REFLECTION OF REALITY, THEY ARE OFTEN BEST INFORMATION AVAILABLE
ACCOUNTING NUMBERS
FINANCIAL STATEMENTS REPORT
BOOK VALUE
WHEN A COMBINING COMMON SIZE AND COMMON BASE YEAR ANALYSIS THE EFFECT OF OVERALL GROWTH IN ASSETS CAN BE ELIMINATED BY FIRST FORMING THE;
COMMON-SIZE STATEMENTS
THE CURRENT RATIO SHOWS THE RELATIONSHIP BETWEEN
CURRENT ASSETS AND CURRENT LIABILITIES
WHICH OF THE FOLLOWING IS THE CORRECT REPRESENTATION OF THE CASH COVERAGE RATIO
EBIT+ NON-CASH EXPENSE/ INTREST EXPENSE
TRUE OR FALSE: THERE IS ONLY ONE METHOD FOR PREPARING THE STATEMENT OF CASH FLOWS
FALSE
LONG TERM SOLVENCY RATIOS ARE KNOWN AS
FINANCIAL LEVERAGE RATIOS
___ ___ ARE THE PRIME SOURCE OF INFORMATION ABOUT A FIRMS FINANCIAL HEALTH
FINANCIAL STATEMENT
AS LONG AS ALL SALES REQUESTS ARE BEING MET A___ INVENTORY IS BETTER
HIGHER
WHEN THE TYPICAL STOCK IN THE S&P 500 INDEX HAS A PE RATIO 12 A COMPANY WITH A PE RATIO OF 15 MAY HAVE___ THAN AVERAGE GROWTH PROSPECTS GIVEN SIMILAR EARNINGS PER SHARE
HIGHER
THE INFORMATION NEEDED TO COMPUTE THE PROFIT MARGIN CAN BE FOUND ON THE ___
INCOME STATMENT
AN___ IN NET PROFIT MARGIN WILL INCREASE ROE
INCREASE
WHICH ONE OF THE FOLLOWING DOES NOT AFFECT ROE ACCORDING TO THE DUPONT IDENTIFY
INVESTOR SENTIMENT
WHAT WILL HAPPEN TO THE CURRENT RATIO IF CURRENT ASSETS INCREASE WHILE EVERYTHING ELSE REMAINS UNCHANGED
IT WILL INCREASE
IF MANAGEMENT HAS BEEN UNSUCCESSFUL AT CREATING VALUE FOR THE COMPANY STOCKHOLDERS THE MARKET TO BOOK RATIO WILL BE
LESS THAN 1
SOME FINANCIAL RATIOS MEASURE A FIRMS___ WHICH SHOWS ABILITY MEET SHORT TERM OBLIGATIONS WITHOUT UNDUE STRESS WHILE OTHERS MEASURE FIRMS FINANCIAL___ WHICH DEMONSTRATES THE PROPORTION OF ASSETS FINANCED BY LONG TERM OBLIGATIONS
LIQUIDITY; LEVERAGE
THE QUICK RATIO PROVIDES A MORE REL LIABLE MEASURE OF LIQUIDITY THAN THE CURRENT ESPECIALLY WHEN THE COMPANY INVENTORY TAKES A ___ TIME TO SELL
LONG
TOTAL CAPITALIZATION EQUALS TOTAL EQUITY PLUS TOTAL
LONG TERM DEBT
HOW IS MARKET TO BOOK RATIO MEASURED
MARKET VALUE PER SHARE/ BOOK VALUE PER SHARE
WHICH RATIOS USE SOME INFORMATION THAT IS NOT CONTAINED IN FINANCIAL STATEMENTS
MARKET VALUE RATIOS
WHAT IS THE MAIN DIFFERENCE BETWEEN THE CASH COVERAGE RATIO AND THE TIMES INTEREST EARNED RATIO
NON CASH EXPENSES
ONE OF THE MOST IMPORTANT USES OF FINANCIAL INFORMATION WITHIN THE FIRM IS
PERFORMANCE EVALUATION
WHEN A COMPANY HAS A NEGATIVE EARNINGS FOR AN EXTENDED PERIOD OF TIME ANALYSTS WILL OFTEN RESORT TO THE
PRICE SALES RATIO
WHICH OF THE FOLLOWING REPRESENTS THE RECEIVABLES TURNOVER RATIO
SALES/ ACCOUNTS RECEIVABLE
WHICH ONE OF THE FOLLOWING EQUATIONS DEFINE THE TOTAL ASSET TURNOVER RATIO
SALES/ TOTAL ASSETS
AT THE MOST FUNDAMENTAL LEVEL, FIRMS GENERATE CASH AND
SPEND IT
___ FINANCIAL STATEMENTS PROVIDE FOR COMPARISON OF FIRMS THAT DIFFER IN SIZE
STANDARDIDZED
WHAT DOES AN INVENTORY TURNOVER RATIO OF 5 MEAN
THE ENTIRE INVENTORY WAS SOLD AND REPLACED 5 TIMES DURING THE YEAR
WHAT DOES IT MEAN WHEN A FIRM HAS A DAYS SALES IN RECEIVABLES OF 45
THE FIRM COLLECTS ITS CREDIT SALES IN 45 DAYS ON AVERAGE
WHAT DOES A CURRENT RATIO OF 1.2MEAN
THE FIRM HAS 1.20 IN CURRENT ASSETS FOR EVERY 1 DOLLAR IN CURRENT LIABILITIES
THE EBITDA RATIO IS SIMILAR IN SPIRIT TO
THE PE RATIO
WHICH ONE OF THE FOLLOWING IS ONE WAY IN WHICH MANAGERS USE A COMMON-SIZE BALANCE SHEET
TO TRACK CHANGES IN A FIRMS CAPITAL STRUCTURE
WHICH OF THE FOLLOWING IS THE CORRECT REPRESENTATION OF THE TOTAL DEBT RATIO
TOTAL ASSETS-TOTAL EQUITY/TOTAL ASSETS
TRUE OR FALSE A GOOD WORKING KNOWLEDGE OF FINANCIAL STATEMENTS IS DESIRABLE BECAUSE SUCH STATEMENTS ARE PRIMARY MEANS OFVCOMMUNICATING FINANCIAL INFORMATION BOTH WITHIN AND OUTSIDE THE FIRM
TRUE