Question 1

Catherine's Consulting paid dividends of $3,300 and total equity of $39,450.The debt-equity ratio is 1 and the plowback ratio is 40 percent.What is the return on assets?

Accepted Answer

A)  6.24 percent
B)  6.09 percent
C)  7.23 percent
D)  6.97 percent
E)  5.72 percentF) B) and D)
G) All of the above

Question 2

From a cash flow position,which one of the following ratios best measures a firm's ability to pay the interest on its debts?

Accepted Answer

A)  Times interest earned ratio
B)  Cash coverage ratio
C)  Cash ratio
D)  Quick ratio
E)  Interval measureF) B) and D)
G) A) and D)

Question 3

Which one of the following is most apt to cause a profitable,stable firm to have a higher price-earnings ratio?

Accepted Answer

A)  Slow industry outlook
B)  Very low current earnings
C)  Low market share
D)  Low prospect of firm growth
E)  Low investor opinion of firmF) C) and D)
G) A) and C)

Question 4

The financial ratio measured as net income divided by sales is known as the firm's:

Accepted Answer

A)  profit margin.
B)  return on assets.
C)  return on equity.
D)  asset turnover.
E)  earnings before interest and taxes.F) A) and E)
G) D) and E)

Question 5

Browning's has a debt-equity ratio of .47.What is the equity multiplier?

Accepted Answer

A)  1.47
B)  .53
C)  2.13
D)  1.13
E)  1.53F) C) and D)
G) B) and C)

Question 6

Enterprise value is based on the:

Accepted Answer

A)  market value of interest-bearing debt plus the market value of equity minus cash.
B)  book values of debt and assets,other than cash.
C)  market value of equity plus the book value of total debt minus cash.
D)  book value of debt plus the market value of equity.
E)  book values of debt and equity less cash.F) A) and E)
G) All of the above

Question 7

Frederico's has a net income of $29,600,a total asset turnover of 1.4,total assets of $318,600,and a debt-equity ratio of .35.What is the return on equity?

Accepted Answer

A)  16.72 percent
B)  8.40 percent
C)  12.54 percent
D)  14.67 percent
E)  17.56 percentF) A) and B)
G) A) and E)

Question 8

Narrow Falls Lumber has total assets of $913,600,total debt of $424,500,net sales of $848,600,and net income of $94,000.The tax rate is 21 percent and the dividend payout ratio is 30 percent.What is the firm's sustainable growth rate?

Accepted Answer

A)  13.97 percent
B)  14.46 percent
C)  15.54 percent
D)  12.63 percent
E)  14.91 percentF) B) and D)
G) A) and E)

Question 9

Which one of the following statements is correct if a firm has a receivables turnover of 10?

Accepted Answer

A)  It takes the firm 10 days to collect payment from its customers.
B)  It takes the firm 36.5 days to sell its inventory and collect the payment from the sale.
C)  It takes the firm an average of 36.5 days to sell its items.
D)  The firm collects its credit sales in an average of 36.5 days.
E)  The firm has ten times more in accounts receivable than it does in cash.F) A) and B)
G) B) and E)

Question 10

Mountain Top Markets has total assets of $48,700,net working capital of $1,100,and retained earnings of $21,200.The firm has 12,500 shares of stock outstanding with a par value of $1 per share and a market value of $7.10 per share.The stock was originally issued to the firm's founders at par value.What is the market-to-book ratio?

Accepted Answer

A)  3.19
B)  2.22
C)  2.78
D)  3.03
E)  2.63F) A) and E)
G) D) and E)

Question 11

The equity multiplier is measured as total:

Accepted Answer

A)  equity divided by total assets.
B)  equity plus total debt.
C)  assets minus total equity,divided by total assets.
D)  assets plus total equity,divided by total debt.
E)  assets divided by total equity.F) A) and D)
G) B) and E)

Question 12

If a firm produces a return on assets of 15 percent and also a return on equity of 15 percent,then the firm:

Accepted Answer

A)  has no debt of any kind.
B)  is using its assets as efficiently as possible.
C)  pays all its earnings out in dividends.
D)  also has a current ratio of 15.
E)  has an equity multiplier of 2.F) A) and B)
G) C) and D)

Question 13

Joe's has old,fully depreciated equipment.Moe's just purchased all new equipment which will be depreciated over eight years.If Joe's and Moe's have the same sales,costs,tax rate,and enterprise value,then:

Accepted Answer

A)  Joe's will have a lower profit margin.
B)  Joe's will have a lower return on equity.
C)  Moe's will have a higher net income.
D)  Moe's and Joe's will have the same EV multiple.
E)  Moe's will have a lower EV multiple.F) C) and D)
G) None of the above

Question 14

Which one of these ratios measures the efficiency at which a firm employs its assets?

Accepted Answer

A)  Profit margin
B)  Return on equity
C)  Equity multiplier
D)  P/E ratio
E)  Total asset turnoverF) B) and C)
G) C) and D)

Question 15

The market-to-book ratio is measured as the:

Accepted Answer

A)  market price per share divided by the par value per share.
B)  net income per share divided by the market price per share.
C)  market price per share divided by the net income per share.
D)  market price per share divided by the dividends per share.
E)  market value per share divided by the book value per share.F) B) and E)
G) B) and C)

Question 16

Deep Falls Timber has net sales of $642,100,net income of $50,800,dividends paid of $12,700,total assets of $658,000,and total equity of $444,400.What is the internal growth rate?

Accepted Answer

A)  5.83 percent
B)  6.24 percent
C)  6.15 percent
D)  5.18 percent
E)  7.70 percentF) A) and D)
G) A) and C)

Question 17

Home Systems has sales of $312,800,cost of goods sold of $218,400,inventory of $46,300,and accounts receivable of $62,700.How many days,on average,does it take the firm to both sell its inventory and collect payment on the sale?

Accepted Answer

A)  142.10
B)  96.37
C)  178.21
D)  150.54
E)  124.03F) B) and D)
G) A) and B)

Question 18

A capital intensity ratio of 1.03 means a firm has $1.03 in:

Accepted Answer

A)  total debt for every $1 in equity.
B)  equity for every $1 in total debt.
C)  sales for every $1 in total assets.
D)  total assets for every $1 in sales.
E)  long-term assets for every $1 in short-term assets.F) A) and E)
G) All of the above

Question 19

A firm has a total debt ratio of .47.This means the firm has 47 cents in debt for every:

Accepted Answer

A)  $1 in total equity.
B)  $.53 in total assets.
C)  $1 in current assets.
D)  $.53 in total equity.
E)  $1 in fixed assets.F) C) and E)
G) A) and B)

Question 20

Black Stone Mills has an enterprise value ratio of 9.8,a profit margin of 6.5 percent,sales of $946,200,costs of $631,400,depreciation of $17,900,interest expense of $4,500,and a total tax rate of 23 percent.What is the value of the enterprise?

Accepted Answer

A)  $3,102,900
B)  $3,085,040
C)  $2,748,300
D)  $3,206,780
E)  $2,918,640F) C) and E)
G) A) and B)

Exam 3: Financial Statements and Cash Flow

A firm has a total debt ratio of .47.This means the firm has 47 cents in debt for every:

Correct Answer
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Catherine's Consulting paid dividends of $3,300 and total equity of $39,450.The debt-equity ratio is 1 and the plowback ratio is 40 percent.What is the return on assets?

Correct Answer
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Home Systems has sales of $312,800,cost of goods sold of $218,400,inventory of $46,300,and accounts receivable of $62,700.How many days,on average,does it take the firm to both sell its inventory and collect payment on the sale?

Correct Answer
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Which one of the following is most apt to cause a profitable,stable firm to have a higher price-earnings ratio?

Correct Answer
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From a cash flow position,which one of the following ratios best measures a firm's ability to pay the interest on its debts?

Correct Answer
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The equity multiplier is measured as total:

Correct Answer
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A capital intensity ratio of 1.03 means a firm has $1.03 in:

Correct Answer
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Deep Falls Timber has net sales of $642,100,net income of $50,800,dividends paid of $12,700,total assets of $658,000,and total equity of $444,400.What is the internal growth rate?

Correct Answer
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Which one of these ratios measures the efficiency at which a firm employs its assets?

Correct Answer
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Correct Answer
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Which one of the following statements is correct if a firm has a receivables turnover of 10?

Correct Answer
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Enterprise value is based on the:

Correct Answer
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Frederico's has a net income of $29,600,a total asset turnover of 1.4,total assets of $318,600,and a debt-equity ratio of .35.What is the return on equity?

Correct Answer
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The financial ratio measured as net income divided by sales is known as the firm's:

Correct Answer
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Narrow Falls Lumber has total assets of $913,600,total debt of $424,500,net sales of $848,600,and net income of $94,000.The tax rate is 21 percent and the dividend payout ratio is 30 percent.What is the firm's sustainable growth rate?

Correct Answer
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Browning's has a debt-equity ratio of .47.What is the equity multiplier?

Correct Answer
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The market-to-book ratio is measured as the:

Correct Answer
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If a firm produces a return on assets of 15 percent and also a return on equity of 15 percent,then the firm:

Correct Answer
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Joe's has old,fully depreciated equipment.Moe's just purchased all new equipment which will be depreciated over eight years.If Joe's and Moe's have the same sales,costs,tax rate,and enterprise value,then:

Correct Answer
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Black Stone Mills has an enterprise value ratio of 9.8,a profit margin of 6.5 percent,sales of $946,200,costs of $631,400,depreciation of $17,900,interest expense of $4,500,and a total tax rate of 23 percent.What is the value of the enterprise?

Correct Answer
verified

Exam 3: Financial Statements and Cash Flow

A firm has a total debt ratio of .47.This means the firm has 47 cents in debt for every:

Correct AnswerverifiedShow Answer

Catherine's Consulting paid dividends of $3,300 and total equity of $39,450.The debt-equity ratio is 1 and the plowback ratio is 40 percent.What is the return on assets?

Correct AnswerverifiedShow Answer

Home Systems has sales of $312,800,cost of goods sold of $218,400,inventory of $46,300,and accounts receivable of $62,700.How many days,on average,does it take the firm to both sell its inventory and collect payment on the sale?

Correct AnswerverifiedShow Answer

Which one of the following is most apt to cause a profitable,stable firm to have a higher price-earnings ratio?

Correct AnswerverifiedShow Answer

From a cash flow position,which one of the following ratios best measures a firm's ability to pay the interest on its debts?

Correct AnswerverifiedShow Answer

The equity multiplier is measured as total:

Correct AnswerverifiedShow Answer

A capital intensity ratio of 1.03 means a firm has $1.03 in:

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Deep Falls Timber has net sales of $642,100,net income of $50,800,dividends paid of $12,700,total assets of $658,000,and total equity of $444,400.What is the internal growth rate?

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Which one of these ratios measures the efficiency at which a firm employs its assets?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following statements is correct if a firm has a receivables turnover of 10?

Correct AnswerverifiedShow Answer

Enterprise value is based on the:

Correct AnswerverifiedShow Answer

Frederico's has a net income of $29,600,a total asset turnover of 1.4,total assets of $318,600,and a debt-equity ratio of .35.What is the return on equity?

Correct AnswerverifiedShow Answer

The financial ratio measured as net income divided by sales is known as the firm's:

Correct AnswerverifiedShow Answer

Narrow Falls Lumber has total assets of $913,600,total debt of $424,500,net sales of $848,600,and net income of $94,000.The tax rate is 21 percent and the dividend payout ratio is 30 percent.What is the firm's sustainable growth rate?

Correct AnswerverifiedShow Answer

Browning's has a debt-equity ratio of .47.What is the equity multiplier?

Correct AnswerverifiedShow Answer

The market-to-book ratio is measured as the:

Correct AnswerverifiedShow Answer

If a firm produces a return on assets of 15 percent and also a return on equity of 15 percent,then the firm:

Correct AnswerverifiedShow Answer

Joe's has old,fully depreciated equipment.Moe's just purchased all new equipment which will be depreciated over eight years.If Joe's and Moe's have the same sales,costs,tax rate,and enterprise value,then:

Correct AnswerverifiedShow Answer

Black Stone Mills has an enterprise value ratio of 9.8,a profit margin of 6.5 percent,sales of $946,200,costs of $631,400,depreciation of $17,900,interest expense of $4,500,and a total tax rate of 23 percent.What is the value of the enterprise?

Correct AnswerverifiedShow Answer

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