FINN 3120 chapter 2

Which one of these is correct?

Net income is distributed either to dividends or retained earnings.

If a firm has an inventory turnover of 15, the firm:

sells its entire inventory an average of 15 times each year.

Operating cash flow is defined as:

the cash that a firm generates from its normal business activities.

Which one of these statements is true concerning the price-earnings (PE) ratio?

A high PE ratio may indicate that a firm is expected to grow significantly.

A firm has an equity multiplier of 1.5. This means that the firm has a:

debt-equity ratio of .50

Given a profitable firm, depreciation:

lowers taxes.

Paid-in surplus is classified as:

owners' equity.

Financial statement analysis:

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

Shareholders' equity is best defined as:

the residual value of a firm.

Which one of the following is an intangible fixed asset?

Copyright

Which one of the following will increase the profit margin of a firm, all else held constant?

Decrease in the tax rate

Leon is the owner of a corner store. Which ratio should he compute if he wants to know how long the store can pay its bills given its current level of cash and accounts receivable? Assume all receivables are collectible when due.

Quick ratio

Production equipment is classified as:

a tangible fixed asset.