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Exam 3: Evaluation of Financial Performance

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Question 21

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What is the return on stockholders' equity for a firm with a net profit margin of 5.2 percent, sales of $620,000, an equity multiplier of 1.8, and total assets of $380,000?

A) 8.48%
B) 5.74%
C) 15.27%
D) 9.36%

E) B) and D)
F) A) and D)

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Question 22

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A firm's current ratio is 1.5 and its quick ratio is 1.0. If its current liabilities are $10,000, what are its inventories?

A) $ 5,000
B) $10,000
C) $15,000
D) $20,000

E) B) and C)
F) A) and B)

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Question 23

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If a firm has a total asset turnover of 8 times and a return on total assets of 15%, its net profit margin must be

Newfangled Dangle Systems had earnings after tax of $1,000,000 last year. Included in its expenses were $50,000 of interest, $100,000 of deferred taxes, and $150,000 of depreciation. In addition, the company paid dividends of $200,000 to its stockholders last year. What was Newfangled's after-tax cash flow last year?

The major types of financial ratios include all of the following except

The primary weakness of the current ratio is

Greg is interested in investing in a small company, and he thinks Good Buy Co. might be a good investment. He has been given the following information and would like to know the return on stockholder's equity. Assume Good Buy's marginal tax rate is 40%.

Most analysts prefer using price to free cash flow rather than price-to-earnings (P/E) ratio because price to free cash flow is:

What information can be determined by common size financial statements?

____ indicate the firm's capacity to meet its debt obligations, both short-term and long-term.

If a firm has interest expenses of $10,000 per year, sales of $700,000, a tax rate of 40%, and a net profit margin of 7%, what is the firm's times interest earned ratio?

Nukin' Gnats Pest Control is trying to determine its cash flow per share. It has revenue of $50,000, $35,000 of expenses, $4,000 of depreciation and $3,000 of interest expense. The firm is in the 40% tax bracket. The firm has 75,000 shares of common stock outstanding. Its cash flow per share is:

The quick ratio is the same as current ratio except it does not consider

The fixed charge coverage ratio includes all of the following except ____ in the denominator.

Asset management ratios indicate

Financial leverage ratios measure the

Market based ratios can be which of the following: I. Price-to-earnings ratio II. Dividend yield

____ ratios indicate how efficiently a firm is using its assets to generate sales.

The ____ ratio, sometimes called the "acid test," is a more stringent measure of ____ than the current ratio.

Last year, Monroe Bro Products had $25,000 net cash provided by its operating activities. Its investing activities used $30,000, and its financing activities provided $10,000. Its cash and cash equivalents balance at the beginning of the year was $15,000. By how much did Monroe's cash and cash equivalents increase?