Chapters 3 & 4 Quiz

your company will need $18,000 in 2 years to purchase a new asset to have enough later, how much must your company invest now assuming you can earn 13% interest

$-14,096.64

if you invest $400 total and you can earn 8% return, what will your investment be worth after 12 years

$1,007.27

pro forma financial statements are...

-the most comprehensive means of financial forecasting -often required by prospective creditors -projections of financial statements for a future period

which of the following is not a utilization/efficiency ratio? -inventory turnover -average collection period -return on assets -fixed asset turnover

return on assets

if Turnpoint Inc. has net income of $400,000, assets of $5,000,000, sales of $2,000,000, and debt of $2,000,000, what is their ROE

between 13-14%

if Winona Inc. has an EM of 2.4, a current ratio of 1.7, NPM of 14%, GPM of 60%, and TAT of 1.4, what is their ROE

between 40-50%

what ratios compare balance sheet assets to income statement data, to examine how useful assets are in generating return

efficiency ratios

of the following profit margin ratios, which one is always the highest -net profit margin -gross profit margin -operating profit margin

gross profit margin

a firm with a large current ratio and a small quick ratio has a lot of...

inventory

what ratios measure financial risk taking

leverage ratios

what ratios measure a firm's ability to pay for short-term obligations

liquidity ratios

will return on equity be higher than return on assets if there is a debt in a firm's capital structure

no

what ratios examine net income and compare earnings to various items

profitability ratios

what two ratios are used in the DuPont system to create return on assets (ROA)

total asset turnover (TAT) and net profit margin (NPM)

are ratios used to compare different firms in the same industry

yes