Mgmt 449 CH. 12
"Times interest earned" is an example of a(n) A) leverage ratio. B) liquidity ratio. C) activity ratio. D) asset management ratio. E) profitability ratio.
A
According to the text, what information can be obtained by accessing the SEC website? A) corporate annual reports and 10 B) press releases C) product specifications D) research and development trends E) information about graduate school
A
At what Z-value is a firm considered in serious trouble? A) below 1.81 B) above 1.81 C) greater than 5.0 D) between 2.2 and 3.1 E) between 3.2 and 4.1
A
Which financial indicator is calculated by the ratio of annual dividends per share to annual earnings per share? A) dividend payout ratio B) dividend yield on common stock C) price/earnings ratio D) return on investment E) return on equity
A
Which financial ratio measures the company's ability to pay off its short from current assets, excluding inventories? A) quick ratio B) current ratio C) cash ratio D) strategic ratio E) inventory ratio
A
Which financial ratio measures the extent to which borrowed funds have been used to finance the company's assets? A) debt to asset ratio B) debt to equity ratio C) long D) times interest earned E) current liabilities to equity
A
Which financial ratio shows the return on all of the assets under its control regardless of source of financing? A) return on investment B) return on equity C) earnings per share D) gross profit margin E) net profit margin
A
"Inventory to net working capital" is an example of a(n) A) leverage ratio. B) liquidity ratio. C) activity ratio. D) asset management ratio. E) profitability ratio.
B
At what Z-value level is a firm considered healthy? A) below 1.81 B) above 3.0 C) above 5.0 D) between 6.0 and 10.0 E) above 100
B
Dollars adjusted for inflation to make them comparable over various years are known as A) consumer dollars. B) constant dollars. C) consumer inflation. D) constant inflation. E) earning dollars.
B
Net profit margin is what type of financial ratio? A) liquidity ratio B) profitability ratio C) activity ratio D) leverage ratio E) revenue ratio
B
The calculation of ratios from financial data is referred to as A) SWOT analysis. B) ratio analysis. C) receivables analysis. D) integration analysis. E) diversification analysis.
B
What financial ratio serves as a short-term indicator of the company's ability to pay its short-term liabilities from its short-term assets? A) quick ratio B) current ratio C) cash ratio D) strategic ratio E) inventory ratio
B
What has been the most popular method of teaching strategy and policy for years? A) lecture B) case analysis C) team teaching D) group presentations E) student teaching
B
Which financial indicator is calculated by the ratio of market price per share to earnings per share? A) return on investment B) price/earnings ratio C) return on equity D) dividend yield on common stock E) dividend payout ratio
B
Which financial indicator measures the number of one day's worth of inventory that a company has on hand at any given time? A) days of cash B) days of inventory C) average collection period D) fixed asset turnover E) inventory turnover
B
Which financial indicator shows the current market's evaluation of a stock, based on its earnings? A) debt to asset ratio B) price/earnings ratio C) coverage of fixed charges D) debt to equity ratio E) times interest earned
B
Which financial ratio indicates the dividend rate of return to common shareholders at the current market price? A) return on equity B) dividend yield on common stock C) price/earnings ratio D) dividend payout ratio E) earnings per share
B
Which financial ratio indicates the percentage of profit that is paid out as dividends? A) return on equity B) dividend payout ratio C) dividend yield on common stock D) price/earnings ratio E) debt to asset ratio
B
Which financial ratio measures the rate of return on the book value of shareholders' total investment in the company? A) return on investment B) return on equity C) gross profit margin D) net profit margin E) earnings per share
B
Which financial ratio measures the utilization of all of the company's assets? A) days of inventory B) asset turnover C) inventory turnover D) fixed asset turnover E) average collection period
B
"Days of inventory" is an example of a(n) A) leverage ratio. B) liquidity ratio C) activity ratio. D) asset management ratio. E) profitability ratio.
C
According to Schilit, the search for hidden weaknesses in a company's performance is known as A) a strategic audit. B) a SWOT analysis. C) forensic accounting. D) activity based accounting. E) competitive analysis.
C
All of the following ratios are used in the calculation of a company's Z-value EXCEPT A) working capital/total assets. B) retained earnings/total assets. C) current assets/current liabilities. D) market value of equity/total liabilities. E) sales/total assets.
C
Converting categories on financial statements from dollar terms to percentages results in A) inflation B) diverse rates of returns. C) common D) constant dollar denominations. E) equivalency comparison.
C
Inventory turnover and asset turnover are both examples of which type of financial ratio? A) liquidity ratio B) profitability ratio C) activity ratio D) leverage ratio E) revenue ratio
C
The formula which indicates if a company embarking on a growth strategy will need to take on debt to fund this growth is called A) the return on investment. B) the CAPM. C) the index of sustainable growth. D) operating cash flow. E) the Z
C
The quick ratio is also known as the A) key profitability ratio. B) EPS. C) acid test. D) asset turnover. E) key activity ratio.
C
What benefit does converting sales and profits to constant dollars in times of inflation offer when analyzing a case? A) It is helpful in predicting the future potential of the organization. B) It contributes to determining the risk factors when computing the Z C) It shows the true performance of the corporation adjusted for inflation to make them comparable over years. D) It is easier for the financial analyst to judge the effectiveness of management's decision making. E) It provides a method which is familiar and easy to understand.
C
What is the main purpose of conducting outside research into the environmental setting of the case? A) It allows students to identify how the company addressed the problem. B) It provides a learning experience on library usage which is helpful in all courses. C) It gives a realistic background of the industry during a specified period. D) It gives you clues as to what the organization should be doing in the future. E) It furnishes large amounts of data
C
Which financial indicator is calculated as the ratio of annual credit sales to accounts receivable? A) days of cash B) average collection period C) accounts receivable turnover D) inventory turnover E) net working capital turnover
C
Which financial indicator is calculated by the ratio of annual dividends per share to current market price per share? A) return on equity B) dividend payout ratio C) dividend yield on common stock D) price/earnings ratio E) debt to equity ratio
C
Which financial ratio indicates the ability of the company to meet its annual interest costs? A) debt to asset ratio B) debt to equity ratio C) times interest earned D) long E) coverage of fixed charges
C
Which financial ratio indicates the number of days of cash on hand, at present sales levels? A) days of inventory B) fixed asset turnover C) days of cash D) average collection period E) inventory turnover
C
Which financial ratio measures the extent to which the company's capital is in cash or cash equivalents? A) quick ratio B) current ratio C) cash ratio D) strategic ratio E) inventory ratio
C
Which of the following financial ratios is NOT a profitability ratio? A) net profit margin B) gross profit margin C) asset turnover D) ROE E) ROI
C
Which of the following is NOT one of the categories of important financial ratios that is mentioned in the text to help assess an organization's overall financial situation? A) leverage ratios B) liquidity ratios C) asset management ratios D) activity ratios E) profitability ratios
C
________ is used worldwide and measures the total output of goods and services within a country's borders. A) CPI B) Prime interest rate C) GDP D) Z E) The Index of sustainable growth
C
47) Which financial ratio indicates how much after sales? A) return on investment B) return on equity C) gross profit margin D) net profit margin E) inventory to net working capital
D
According to the text, what percentage of security analysts use annual reports when making decisions? A) 20% B) 35% C) 50% D) 75% E) 100%
D
All of the following are true of annual reports EXCEPT A) 80% of portfolio managers use annual reports when making decisions. B) annual reports contain income statements and balance sheets. C) annual reports contain cash flow statements. D) annual reports contain all the information found in the 10 E) annual reports contain notes to the financial statements indicating why certain actions were taken.
D
All of the following ratios reflect leverage ratios EXCEPT A) debt to asset ratio. B) times interest earned. C) coverage of fixed charges. D) price/earnings ratio. E) debt to equity ratio.
D
All of the following ratios represent activity ratios EXCEPT A) accounts payable period. B) days of inventory. C) net working capital turnover. D) earnings per share. E) days of cash.
D
All of the following represent liquidity ratios EXCEPT A) cash ratio. B) inventory to net working capital. C) quick ratio. D) gross profit margin. E) current ratio.
D
Among the most useful and important documents that can be used to understand why actions were taken are A) news releases. B) product specification reports. C) its corporate history. D) annual reports. E) 10
D
Between 1997 and 1999, what percent of the mergers used the pooling approach to account for the value of the companies' stocks? A) 95% B) 80% C) 55% D) 40% E) 20%
D
Fixed asset turnover is what type of financial ratio? A) liquidity ratio B) profitability ratio C) leverage ratio D) activity ratio E) revenue ratio
D
The Z-value uses ________ ratios and weights them according to their importance to a corporation's financial strength. A) 2 B) 3 C) 4 D) 5 E) 6
D
To adjust for general inflation in the United States, what index does the text suggest? A) Dow B) New York Stock Exchange Index C) Wilshire 500 Equity Index D) Consumer Price Index E) NASDAQ Series
D
Which financial indicator measures the ratio of sales to fixed assets? A) days of inventory B) asset turnover C) average collection period D) fixed asset turnover E) inventory turnover
D
Which financial ratio measures the utilization of plant and equipment? A) days of inventory B) asset turnover C) average collection period D) fixed asset turnover E) inventory turnover
D
Which financial ratio shows the after stock? A) return on investment B) return on equity C) gross profit margin D) earnings per share E) net profit margin
D
Which of the following is NOT true of case analysis? A) Case discussion focuses on critical analysis. B) A solution is satisfactory if it resolves important problems and if it is likely to be implemented successfully. C) Case analysis helps build analytic and decision D) A solution is satisfactory if it reflects what the company actually did. E) Case discussion focuses on logical development of thought.
D
Which two basic statements provide most of the financial data needed for analysis? A) statement of retained earnings and income statement B) sources and uses of working capital and the balance sheet C) non D) historical income statement and balance sheet E) statement of financial position and statement of owner's equity
D
"Earnings per share" is an example of a(n) A) leverage ratio. B) liquidity ratio C) activity ratio. D) asset management ratio. E) profitability ratio.
E
According to the text, what percentage of portfolio managers use annual reports when making decisions? A) 20% B) 35% C) 50% D) 60% E) 80%
E
Return on equity A) is the ratio of net profit after taxes to shareholders' equity. B) is a profitability ratio. C) is referred to by the acronym ROE. D) measures the rate of return on the book value of shareholders' total investment in the company. E) all of the above
E
The formula which predicts the likelihood of a corporation going bankrupt is called A) the return on investment. B) the CAPM. C) the index of sustainable growth. D) operating cash flow. E) the Z-value.
E
To get a proper picture of the position of the organization, common ratios should be compared to A) the organization's future historical performance. B) the leading competitor in the industry. C) the financial performance of the overall U.S. gross domestic production (GDP). D) the direct competitor least like the organization. E) industry-wide average trends
E
Which financial ratio is a measure of the ability of the company to meet all of its fixed charge obligations? A) debt to asset ratio B) debt to equity ratio C) times interest earned D) long E) coverage of fixed charges
E
Which financial ratio measures the number of times that average inventory of finished goods was turned over or sold during a period of time? A) days of inventory B) asset turnover C) average collection period D) fixed asset turnover E) inventory turnover
E
Which of the following is a red flag according to Schilit? A) cash flow from operations drops below net income B) accounts receivable growing faster than sales C) fluctuating gross margins over time D) nepotism on the board of directors E) all of the above
E
