Finance 370 Final exam
JM Case Inc. has a market value of $5 million with 500,000 shares outstanding. The book value of its equity is $1,750,000. What is JM Case's price per share?
$10
JM Case Inc. has a market value of $5 million with 500,000 shares outstanding. The book value of its equity is $1,750,000. What is JM Case's book value per share?
$3.50
Which of the following statements concerning a firm's cash flows and profits is false?
A company that sells merchandise at a profit will generate cash soon enough to replenish cash flows required for continued production.
Which of the following is a sign that a company can quickly turn its receivables into cash
A high receivables turnover ratio
Which of the following is a sign that a company cannot quickly turn its receivables into cash
A low receivables turnover ratio
Which of the following is correct?
All: Receivables turnover ratio depicts the company's frequency of cash collections. Inventory turnover ratio can be used to assess the company's frequency of selling inventory. Current ratio reflects the company's ability to pay current debt.
Which of the following is a positive sign that a company is selling its inventory quickly
Both a high venture. turnover ratio and a low average days in inventory
The acid-test ratio is
Cash, net receivables, and current investments divided by current liabilities
which of the following is an example of horizontal analysis
Comparing the change in sales over time
Which of the following is not a common type of comparison in accounting?
Comparisons of earnings per share between companies
The current ratio is calculated as
Current assets divided by Current liabilities
Which of the following ratios is most useful in evaluating liquidity
Current ratio
Which of the following ratios is most useful in evaluating solvency
Debt to equity ratio
Comparing changes in net income for one company over time is an example of
Horizontal analysis
Which of the following tends to cause differences between market values and book values? I. Accounting often creates a dichotomy between realized and unrealized income. II. Accountants allocate goodwill when a firm is acquired for more than book value. III. Many accounting values are transactions-based and hence backward-looking. IV. The use of fair-value accounting. V. Accountants refuse to assign a cost to equity capital.
I, III, and V only
When a company pays a bill from a plumber for previous services on account
Its debt to equity ratio decreases
How much did cash in millions did the company collect from sales?
Net sales - accounts receivable
When using vertical analysis, we express income statement accounts as a percentage of
Sales
Which of the following is not a solvency ratio
The current ratio
. When using vertical analysis, we express balance sheet accounts as a percentage of
Total average assets
Which one of the following is the financial statement that shows a financial snapshot, taken at a point in time, of all the assets the company owns and all the claims against those assets?
balance sheet
The book value of a firm is
based on historical cost
The sources and uses of cash over a stated period of time are reflected on the:
cash flow statement
Which one of the following is the financial statement that summarizes changes in the company's cash balance over a period of time?
cash flow statement
Which of the following is an example of vertical analysis
comparing income statement items as a percentage of sales
Which of the following is an example of horizontal analysis
comparing the growth in sales over time
Which of the following is a source of cash?
decrease in accounts receivable
Noncash items refer to
expenses, like depreciation, which do not directly affect cash flows
Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?
income statement
Horizontal analysis examines trends in a company
over time
Depreciation expense
reduces both taxes and net income
Comparing operating expenses as a percentage of sales is an example of
vertical analysis
