Quiz 1 Questions

Southern Style Realty has total assets of $485,390, net fixed assets of $250,000, current liabilities of $23,456, and long-term liabilities of $148,000. What is the total debt ratio?

.35

The Bike Shoppe has total assets of $536,712 and an equity multiplier of 1.36. What is the debt-equity ratio?

.36

At the beginning of the year, a firm has current assets of $325 and current liabilities of $229. At the end of the year, the current assets are $487 and the current liabilities are $269. What is the change in net working capital?

$122

A balance sheet has total assets of $1,436, fixed assets of $1,006, long-term debt of $536, and short-term debt of $149. What is the net working capital?

$281

The ratios that are based on financial statement values and used for comparison purposes are called:

Financial ratios

The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:

Income statement

Which one of the following changes during a year will increase cash flow from assets but not affect the operating cash flow?

Increase in accounts payable

A firm's liquidity level decreases when:

Inventory is purchased with cash

Given a profitable firm, depreciation:

Lowers taxes

The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:

Marginal tax rate

Highly liquid assets:

Can be sold quickly at close to full value

Red Barchetta Co. paid $27,500 in dividends and $28,311 in interest over the past year. During the year, net working capital increased from $13,506 to $18,219. The company purchased $42,000 in fixed assets and had a depreciation expense of $16805. During the year, the company issued $25,000 in new equity and paid off $21,000 in long-term debt. What was the company's cash flow from assets?

$51,811

A company has $579 in inventory, $1,858 in net fixed assets, $258 in accounts receivable, $113 in cash, and $298 in accounts payable. What are the company's total current assets?

$950

Discount Outlet has net income of $389,100, a profit margin of 2.8 percent, and a return on asstes of *.6 percent. What is the capital intensity ratio?

.33

Skylar's Bed and Breakfast has $126500 in total assets, depreciation of 3,500, and interest of $1,850. The total asset turnover rate is 1.02. Earnings before interest and taxes are equal to 24 percent of sales. What is the cash coverage ratio?

18.63

Prime Electronic Sales has sales of $723,450, total equity of $490,000, a profit margin of 9.3 percent, and a debt-equity ratio of .42. What is the return on assets?

9.67

The potential conflict of interest between a firm's owners and its managers is referred to as which yep of conflict?

Agency

Net working capital includes:

An invoice from a supplier

Which one of the following statements concerning the balance sheet is correct?

Assets are listed in descending order of liquidity

Financial Ratios are traditionall grouped in all but which of the following categories? A) Short- and Long-Term Solvency B) Asset Management C)Working Capital Management D) Profitability Ratios E) Market Value Ratios

B)Asset Management

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

Balance sheet

Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's:

Capital structure

Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:

Capital structure management

The term "free cash flow" is another term to describe:

Cash Flow from Assets

Which one of the following is a measure of long-term solvency?

Cash coverage ratio

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller?

Cash management

Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0.

Cash payment of an account payable

Net working capital is defined as:

Current assets minus current liabilities

The Sarbanes-Oxley Act of 2002 has

Essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

Working capital management includes which one of the following?

Determining which customers will be granted credit

Net capital spending is equal to:

Ending net fixed assets minus beginning net fixed assets plus deprciation

The issuer of a security must be involved in all ___ transactions involving that security.

Primary market

You contacted your stock broker this morning and placed an order to sell 300 shared of a stock that trades on the NYSE. This sale will occur in the:

Secondary market

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

Sells its entire inventory an average of 15 times each year

Capital budgeting includes the evaluation of which of the following?

Size, timing, and risk of future cash flows

An employee has a claim on the cash flows of Martin's Machines. This claim is defined as a claim by one of the firm's

Stakeholders

Operating cash flow is defined as:

The cash that a firm generates from its normal business activities

The daily financial operations of a firm are primarily controlled by managing the:

Working capital

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as:

Working capital management