Finance Ch.3 HW

Mortgage lenders probably have the most interest in the ______ ratios. Multiple Choice 1. long-term debt and times interest earned 2. market-to-book and times interest earned 3. price-earnings and debt-equity 4. return on assets and profit margin 5. return on equity and price-earnings

1. long-term debt and times interest earned

Which one of the following accurately describes the three parts of the DuPont identity? Multiple Choice Return on assets, profit margin, and equity multiplier Operating efficiency, equity multiplier, and profitability ratio Debt-equity ratio, capital intensity ratio, and profit margin Financial leverage, operating efficiency, and profitability ratio Equity multiplier, profit margin, and total asset turnover

Equity multiplier, profit margin, and total asset turnover

Canine Supply has sales of $2,800, total assets of $1,900, and a debt-equity ratio of .5. Its return on equity is 15 percent. What is the net income? Multiple Choice a. $190 b. $240 c. $350 d. $130 e. $210

a. $190

Beach Wear has current liabilities of $350,000, a quick ratio of 1.65, inventory turnover of 4.7, and a current ratio of 2.9. What is the cost of goods sold? Multiple Choice a. $2,056,250 b. $1,760,750 c. $1,980,500 d. $1,950,000 e. $1,560,000

a. $2,056,250

Lassiter Industries has annual sales of $328,000 with 8,000 shares of stock outstanding. The firm has a profit margin of 4.5 percent and a price-sales ratio of 1.20. What is the firm's price-earnings ratio? Multiple Choice a. 26.7 b. 17.4 c. 18.6 d. 21.9 e. 24.3

a. 26.7

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following? Multiple Choice a. 1.5 b. 0.5 c. 1.0 d. 2.0 e. 0

b. 0.5

The most acceptable method of evaluating the financial statements is to compare the company's current financial: Multiple Choice a. statements to the projections that were created based on Tobin's Q. b. ratios to the company's historical ratios. c. statements to the financial statements of similar companies operating in other countries. d. ratios to the average ratios of all companies located within the same geographic area. E. statements to those of larger companies in unrelated industries.

b. ratios to the company's historical ratios.

A firm has a debt-equity ratio of .62, a total asset turnover of 1.24, and a profit margin of 5.1 percent. The total equity is $489,600. What is the amount of the net income? Multiple Choice a. $19,197 b. $28,079 c. $50,159 d. $52,418 e. $40,451

c. $50,159

RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both companies have similar operations. Based on this information, RJ's must be doing which one of the following? a. Generating $1.26 in net income for every $1 in net fixed assets b. Utilizing its fixed assets more efficiently than Sam's c. Utilizing its total assets more efficiently than Sam's d. Generating $1 in sales for every $1.26 in net fixed assets e. Maintaining the same level of current assets as Sam's

c. Utilizing its total assets more efficiently than Sam's

The three parts of the Dupont equation are: Multiple Choice a. Profit margin, Total assets, & Equity Multiplier. b. Profit margin, Operating efficiency, & Equity Multiplier. c. Return on assets, Total asset turnover, & Equity Multiplier. d. Profit margin, Total asset turnover, & Equity Multiplier. e. Return on assets, Total asset turnover, & Debt/Equity ratio.

d. Profit margin, Total asset turnover, & Equity Multiplier.

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios. Multiple Choice a. short-term solvency b. long-term solvency c. turnover d. profitability e. asset management

d. profitability

Return on equity can be calculated as ROA × Equity multiplier. What is another way to express this equation? Multiple Choice a. ROE = ROA × (1 − Equity multiplier) b. ROE = ROA × Total asset Turnover c. ROE = ROA × Operating efficiency d. ROE = ROA × Profit Margin e. ROE = ROA × (1 + Debt − Equity Ratio)

e. ROE = ROA × (1 + Debt − Equity Ratio)

A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of: Multiple Choice sales. total assets. total equity. taxable income. net income.

sales

Hungry Lunch has net income of $73,402, a price-earnings ratio of 13.7, and earnings per share of $.43. How many shares of stock are outstanding? Multiple Choice 1. 165,745 2. 170,702 3. 171,308 4. 12,460 5. 13,520

2. 170,702

Davis Company has provided the following financial data: Total Asset Turnover = .245 Net Income = $400,000 Equity Multiplier = 1.20 Net Sales = $1,300,000 What is the Return on Equity? Multiple Choice 7.8% 6.8% 9.1% 7.2% 8.1%

9.1%

Which one of these identifies the relationship between the return on assets and the return on equity? Multiple Choice Profit margin DuPont identity Profitability determinant Balance sheet multiplier Debt-equity ratio

DuPont identity