Ch 3 Quiz

A common-size balance sheet helps financial managers determine: Multiple Choice if costs are increasing faster or slower than sales. the rate at which the firm's dividend payout is changing. which customers are paying on a timely basis. if changes are occurring in a firm's mix of assets. if a firm is generating more or less sales per dollar of assets than in prior years.

if changes are occurring in a firm's mix of assets.

Tessler Farms has a return on equity of 11.28 percent, a debt-equity ratio of 1.03, and a total asset turnover of .87. What is the return on assets? Multiple Choice 13.67% 5.56% 17.41% 8.06% 15.24%

5.56%

Raynar Enterprises has total equity of $645,500, sales of $1.15 million, and a profit margin of 3.6 percent. What is the return on equity? Multiple Choice 6.41% 7.13% 6.44% 4.16% 7.07%

6.41%

AMC Supply has total assets of $613,000. There are 21,000 shares of stock outstanding with a market value of $13 a share. The firm has a profit margin of 6.2 percent and a total asset turnover of 1.08. What is the price-earnings ratio? Multiple Choice 6.65 7.99 7.41 5.12 6.38

6.65

Adell Furniture has a profit margin of 8.2 percent on sales of $211,000. The common size ratio of dividends is .03 and total assets are $196,000. What is the plowback ratio? Multiple Choice 54.60% 27.33% 68.20% 63.41% 58.20%

63.41%

Prime Electronic Sales has sales of $723,450, total equity of $490,000, a profit margin of 9.3 percent, and a debt-equity ratio of .42. What is the return on assets? Multiple Choice 9.03% 10.07% 9.67% 23.02% 5.05%

9.67%

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? Multiple Choice SED SIC BEC BID SBC

SIC

Mader's Camping Supply reduced its general and administrative costs this year. This cost improvement will increase which of the following ratios? Profit margin Return on assets Total asset turnover Return on equity Multiple Choice I, II, III, and IV I, II, and IV only I and II only I and III only II, III, and IV only

I, II, and IV only

DeSmet Real Estate has cash of $7,800, accounts receivable of $15,600, inventory of $48,850, and net working capital of $5,000. What is the cash ratio? Multiple Choice .12 .45 .08 .42 .15

.12

The Donut Hut has sales of $68,000, current assets of $11,300, net income of $5,100, net fixed assets of $54,900, total debt of $23,800, and dividends of $800. What is the sustainable growth rate? Multiple Choice 11.79% 12.08% 10.48% 12.39% 11.29%

11.29%

A firm has sales of $811,000 for the year. The profit margin is 5.1 percent and the retention ratio is 56 percent. What is the common-size percentage for the dividends paid? Multiple Choice 1.21% 2.86% 1.42% 1.99% 2.24%

2.24%

Fresh Foods has sales of $213,600, total assets of $198,700, a debt-equity ratio of 1.43, and a profit margin of 4.8 percent. What is the equity multiplier? Multiple Choice 2.30 1.93 2.43 .43 .30

2.43

The sustainable growth rate is based on the premise that: Multiple Choice the dividend payout ratio will be zero. the dividend payout ratio will increase at a steady rate. no additional equity will be added to the firm. an additional dollar of debt will be acquired only if an additional dollar in equity shares is issued. the debt-equity ratio will be held constant.

the debt-equity ratio will be held constant.

Common-size financial statements present all balance sheet account values as a percentage of: Multiple Choice sales. last year's account value. the forecasted budget. total assets. total equity.

total assets.

Quincy Real Estate pays out a fixed percentage of its net income to its shareholders in the form of annual dividends. Given this, the percentage shown on a common-size income statement for the dividend account will: Multiple Choice remain constant over time. vary in direct relation to changes in the sales level. vary in direct relation to the net profit percentage. be equal to the dividend amount divided by the net income. vary but not in direct relation to any other variable.

vary in direct relation to the net profit percentage.

Prisqua Rentals has inventory of $147,500, equity of $320,000, total assets of $658,800, and sales of $800,780. What is the common-size percentage for the inventory account? Multiple Choice 22.39% 15.07% 39.96% 20.36% 18.42%

22.39%

Last year, a firm earned $67,800 in net income on sales of $934,600. Total assets increased by $62,000 and total equity increased by $43,500 for the year. No new equity was issued, and no shares were repurchased. What is the retention ratio? Multiple Choice 56.25% 70.38% 35.84% 64.16% 29.62%

64.16%

Rogers Radiators has net income of $48,200, sales of $947,100, a capital intensity ratio of .87, and an equity multiplier of 1.53. What is the return on equity? Multiple Choice 6.77% 12.21% 5.93% 14.09% 8.95%

8.95%

LaVerne's Candies reduced its fixed assets this year without affecting the shop's operations, sales, or equity. This reduction will increase which of the following ratios? Capital intensity ratio Return on assets Total asset turnover Return on equity Multiple Choice II, III, and IV only I, II, and IV only I, II, III, and IV I and II only II and III only

II and III only

Financial statement analysis: Multiple Choice is enhanced by comparing results to those of a firm's peers but not by comparing results to prior periods. is limited to internal use by a firm's managers. is primarily used to identify account values that meet the normal standards. provides useful information to shareholders but not to debtholders. provides useful information that can serve as a basis for forecasting future performance.

provides useful information that can serve as a basis for forecasting future performance.