Question 1

The Golden Slipper has sales of $487,900,EBIT of $128,650,taxes of 35 percent,interest paid of $12,400,and a dividend payout ratio of 40 percent.What is the common-size ratio of the addition to retained earnings?

Accepted Answer

A)  10.31%
B)  9) 29%
C)  14.43%
D)  11.74%
E)  6) 87%F) A) and B)
G) A) and C)

Question 2

A common-size balance sheet will express accounts receivable as a percentage of

Accepted Answer

A)  sales.
B)  current assets.
C)  net working capital.
D)  total assets.
E)  total owners' equity.F) B) and D)
G) A) and E)

Question 3

The only difference between Joe's and Moe's is that Joe's has old,fully depreciated equipment.Moe's just purchased all new equipment that will be depreciated over 8 years.Assuming all else equal,

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 will have a lower profit margin.
E)  Moe's will have a higher return on assets.F) A) and E)
G) None of the above

Question 4

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.  What is the cash coverage ratio?

Accepted Answer

A)  7) 90 times
B)  12.04 times
C)  11.99 times
D)  9) 63 times
E)  13.67 timesF) A) and C)
G) A) and E)

Question 5

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.  What is the quick ratio?

Accepted Answer

A)  1) 03 times
B)  1) 26 times
C)  0) 96 times
D)  0) 82 times
E)  1) 08 timesF) A) and C)
G) A) and B)

Question 6

Jessica's Boutique has cash of $687,accounts receivable of $1,419,accounts payable of $1,308,and inventory of $2,609.What is the value of the quick ratio?

Accepted Answer

A)  .53 times
B)  3.60 times
C)  .48 times
D)  1.84 times
E)  1.61 timesF) B) and E)
G) A) and D)

Question 7

Martin's Lumber has a profit margin of 7 percent and a dividend payout ratio of 30 percent.The total asset turnover is 0.90,and the debt-equity ratio is 0.45.What is the sustainable rate of growth?

Accepted Answer

A)  6) 33%
B)  6) 83%
C)  6) 67%
D)  6) 90%
E)  6) 99%F) B) and E)
G) D) and E)

Question 8

When creating pro forma statements,the changes in the liabilities and owners' equity sections depend primarily on the firm's

Accepted Answer

A)  financing policies.
B)  interest rates and financing policies.
C)  dividend and financing policies.
D)  retained earnings policies.
E)  rate of sales growth.F) A) and B)
G) C) and D)

Question 9

Vaun's Pet Store paid $24,300 in interest and $32,000 in dividends last year.The times interest earned ratio is 4.1,and the depreciation expense is $126,200.What is the value of the cash coverage ratio?

Accepted Answer

A)  8) 77 times
B)  5) 19 times
C)  7) 75 times
D)  9) 29 times
E)  8) 20 timesF) C) and D)
G) A) and E)

Question 10

On a common-size income statement,depreciation will be

Accepted Answer

A)  omitted since it is a noncash expense.
B)  added back to convert net income to cash flows.
C)  expressed as a percentage of total assets.
D)  expressed as a percentage of sales.
E)  expressed as a percentage of gross fixed assets.F) C) and E)
G) C) and D)

Question 11

If Brewster's produces a return on assets of 14 percent and also a return on equity of 14 percent,then the firm

Accepted Answer

A)  has no net working capital.
B)  is using its assets as efficiently as possible.
C)  has no debt of any kind.
D)  also has a current ratio of 14.
E)  has an equity multiplier of 1.4.F) B) and C)
G) C) and D)

Question 12

Which one of the following statements is correct if a firm has an accounts receivable turnover measure of 10?

Accepted Answer

A)  It takes the firm 36.5 days to pay its creditors.
B)  It takes the firm 36.5 days to sell its inventory and collect payment from the sale.
C)  It takes the firm 36.5 days to collect payment for a sale.
D)  The firm has 10 times more in accounts receivable than it does in cash.
E)  It takes an average of 10 days to collect payment from the firm's customers.F) All of the above
G) B) and D)

Question 13

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.  What is the equity multiplier?

Accepted Answer

A)  2) 31 times
B)  1) 93 times
C)  2) 50 times
D)  2) 08 times
E)  1) 59 timesF) C) and E)
G) All of the above

Question 14

A firm has a debt-equity ratio of 0.36.What is the total debt ratio?

Accepted Answer

A)  0) 26
B)  0) 29
C)  0) 67
D)  0) 71
E)  0) 74F) A) and E)
G) C) and D)

Question 15

If Textile Cloth stockholders want to know how much net profit the firm is making on a percentage basis on their investment in that firm,the shareholders should refer to the

Accepted Answer

A)  profit margin.
B)  return on assets.
C)  return on equity.
D)  equity multiplier.
E)  EV multiple.F) A) and B)
G) A) and C)

Question 16

The lower a firm's inventory turnover,the

Accepted Answer

A)  longer it takes the firm to collect payment on its sales.
B)  faster the firm collects payment on its sales.
C)  faster the firm sells its inventory.
D)  longer inventory sits on the firm's shelves.
E)  smaller the amount of inventory held by the firm.F) A) and B)
G) A) and D)

Question 17

EBITDA is the abbreviation for earnings before

Accepted Answer

A)  insurance,taxes,depreciation,and accounting expenses.
B)  interest,taxes,depreciation,and accrued expenses.
C)  insurance,taxes,depreciation,and accrued expenses.
D)  interest,taxes,depreciation,and amortization.
E)  interest,taxes,and deferred accounting overhead.F) C) and E)
G) A) and B)

Question 18

The return on equity can be calculated as

Accepted Answer

A)  Profit margin × 1 / Capital intensity ratio × Equity multiplier
B)  Return on assets × b
C)  Profit margin × Total asset turnover × Debt-equity ratio
D)  Profit margin × 1 / Equity multiplier × (1 + Debt-equity ratio) 
E)  Return on assets × Debt-equity ratioF) A) and D)
G) B) and C)

Question 19

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)  Debt-equity ratioF) C) and D)
G) A) and C)

Question 20

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent.  What is the debt-equity ratio?

Accepted Answer

A)  0) 75 times
B)  1) 33 times
C)  1) 50 times
D)  0) 98 times
E)  1) 22 timesF) A) and C)
G) D) and E)

Exam 3: Financial Statements Analysis Amcq Financial Models

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the equity multiplier?

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You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the cash coverage ratio?

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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?

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EBITDA is the abbreviation for earnings before

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Martin's Lumber has a profit margin of 7 percent and a dividend payout ratio of 30 percent.The total asset turnover is 0.90,and the debt-equity ratio is 0.45.What is the sustainable rate of growth?

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You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the quick ratio?

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The Golden Slipper has sales of $487,900,EBIT of $128,650,taxes of 35 percent,interest paid of $12,400,and a dividend payout ratio of 40 percent.What is the common-size ratio of the addition to retained earnings?

Correct AnswerverifiedShow Answer

Jessica's Boutique has cash of $687,accounts receivable of $1,419,accounts payable of $1,308,and inventory of $2,609.What is the value of the quick ratio?

Correct AnswerverifiedShow Answer

The return on equity can be calculated as

Correct AnswerverifiedShow Answer

Which one of the following statements is correct if a firm has an accounts receivable turnover measure of 10?

Correct AnswerverifiedShow Answer

On a common-size income statement,depreciation will be

Correct AnswerverifiedShow Answer

The only difference between Joe's and Moe's is that Joe's has old,fully depreciated equipment.Moe's just purchased all new equipment that will be depreciated over 8 years.Assuming all else equal,

Correct AnswerverifiedShow Answer

You have obtained the following information for Blue Bell Farms.The tax rate is 34 percent. What is the debt-equity ratio?

Correct AnswerverifiedShow Answer

If Textile Cloth stockholders want to know how much net profit the firm is making on a percentage basis on their investment in that firm,the shareholders should refer to the

Correct AnswerverifiedShow Answer

If Brewster's produces a return on assets of 14 percent and also a return on equity of 14 percent,then the firm

Correct AnswerverifiedShow Answer

A firm has a debt-equity ratio of 0.36.What is the total debt ratio?

Correct AnswerverifiedShow Answer

A common-size balance sheet will express accounts receivable as a percentage of

Correct AnswerverifiedShow Answer

Vaun's Pet Store paid $24,300 in interest and $32,000 in dividends last year.The times interest earned ratio is 4.1,and the depreciation expense is $126,200.What is the value of the cash coverage ratio?

Correct AnswerverifiedShow Answer

When creating pro forma statements,the changes in the liabilities and owners' equity sections depend primarily on the firm's

Correct AnswerverifiedShow Answer

The lower a firm's inventory turnover,the

Correct AnswerverifiedShow Answer

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