FINA 3824 exam 3 (quiz8-10)

Which one of the following correctly defines the retention ratio?

addition to retained earnings divided by net income

Which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales?

capital intensity ratio

Central Supply purchased a toboggan for inventory this morning and paid cash for it. The time period between today and the day Central Supply will receive cash from the sale of this toboggan is called the:

cash cycle

Which one of the following statements related to the cash flow to creditors is correct?

A positive cash flow to creditors represents a net cash outflow from the firm.

An increase in which one of the following is an indicator that an accounts receivable policy is becoming more restrictive?

AR turnover rate

Which one of the following accurately describes the three parts of the Du Pont identity?

EM, PM, and TAT

Financial planning accomplishes which of the following for a firm? I. determination of asset requirements II. development of plans to contend with unexpected events III. establishment of priorities IV. analysis of funding options

I II III IV

Which of the following will increase the cash cycle, all else constant? I. increasing the inventory period II. decreasing the accounts receivable turnover rate III. increasing the accounts payable period IV. decreasing the accounts receivable period

I and II

Which of the following are sources of cash? I. decrease in inventory II. increase in accounts receivable III. repayment of a bond IV. sale of preferred stock

I and IV

Which of the following are uses of cash? I. collecting a receivable II. increasing inventory III. obtaining a bank loan IV. paying a supplier for previous purchases

II and IV

Which of the following will increase the operating cycle? I. increasing the inventory turnover rate II. increasing the payables period III. decreasing the receivable turnover rate IV. decreasing the inventory level

III

Which one of the following statements is correct? Pro forma statements must assume that no new equity is issued. Pro forma statements are projections, not guarantees. Pro forma statements are limited to a balance sheet and income statement. Pro forma financial statements must assume that no dividends will be paid. Net working capital needs are excluded from pro forma computations

Pro forma statements are projections, not guarantees.

Shareholders probably have the most interest in which one of the following sets of ratios?

ROE and PE

Which one of the following statements is correct concerning the cash cycle?

The longer the cash cycle, the more likely a firm will need external financing.

Which one of the following increases cash?

accepting credit from supplier

A graphical representation of the operating and cash cycles is called a(n):

cash flow time line

The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the:

cash flows from assets

Which one of the following will increase the cash flow from assets, all else equal?

decrease in net capital spending

If a firm produces a twelve percent return on assets and also a twelve percent return on equity, then the firm:

has an equity multiplier of 1.0.

net capital spending

is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense.

The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the:

operating cycle OC= IP + RP

You are getting ready to prepare pro forma statements for your business. Which one of the following are you most apt to estimate first as you begin this process?

sales forecast

Which one of the following must be true if a firm had a negative cash flow from assets?

the firm utilized outside funding