Question 1

What value can the price-sales ratio provide to financial managers that the price-earnings ratio cannot?

Accepted Answer

The price-earnings ratio loses its value...

Question 2

Which one of the following is a use of cash?

Accepted Answer

A)  increase in notes payable
B)  decrease in inventory
C)  increase in long-term debt
D)  decrease in accounts receivables
E)  decrease in common stockF) B) and D)
G) A) and E)

Question 3

Uptown Men's Wear has accounts payable of $2,214,inventory of $7,950,cash of $1,263,fixed assets of $8,400,accounts receivable of $3,907,and long-term debt of $4,200.What is the value of the net working capital to total assets ratio?

Accepted Answer

A)  0.31
B)  0.42
C)  0.47
D)  0.51
E)  0.56F) A) and B)
G) A) and D)

Question 4

Lancaster Toys has a profit margin of 7.5 percent,a total asset turnover of 1.71,and a return on equity of 21.01 percent.What is the debt-equity ratio?

Accepted Answer

A)  0.42
B)  0.64
C)  0.66
D)  0.72
E)  0.78F) B) and D)
G) All of the above B

Question 5

A firm has 160,000 shares of stock outstanding,sales of $1.94 million,net income of $126,400,a price-earnings ratio of 18.7,and a book value per share of $7.92.What is the market-to-book ratio?

Accepted Answer

A)  1.87
B)  1.84
C)  2.23
D)  2.45
E)  2.57F) C) and D)
G) B) and D)

Question 6

A firm has sales of $2,190,net income of $174,net fixed assets of $1,600,and current assets of $720.The firm has $310 in inventory.What is the common-size statement value of inventory?

Accepted Answer

A)  13.36 percent
B)  14.16 percent
C)  19.38 percent
D)  30.42 percent
E)  43.06 percentF) A) and B)
G) C) and D)

Question 7

Which of the following represent problems encountered when comparing the financial statements of two separate entities?
I.Either one,or both,of the firms may be conglomerates and thus have unrelated lines of business.
II.The operations of the two firms may vary geographically.
III.The firms may use differing accounting methods.
IV.The two firms may be seasonal in nature and have different fiscal year ends.

Accepted Answer

A)  I and II only
B)  II and III only
C)  I, III, and IV only
D)  I, II, and III only
E)  I, II, III, and IVF) B) and C)
G) A) and D) E

Question 8

Gladstone Pavers has a long-term debt ratio of 0.6 and a current ratio of 1.6.Current liabilities are $700,sales are $4,440,the profit margin is 9.5 percent,and the return on equity is 19.5 percent.How much does the firm have in net fixed assets?

Accepted Answer

A)  $4,880.18
B)  $4,987.69
C)  $5,666.67
D)  $5,848.15
E)  $6,107.70F) A) and B)
G) B) and C)

Question 9

According to the Statement of Cash Flows,a decrease in accounts receivable will _____ the cash flow from _____ activities.

Accepted Answer

A)  decrease; operating
B)  decrease; financing
C)  increase; operating
D)  increase; financing
E)  increase; investmentF) All of the above
G) A) and B)

Question 10

A firm has an interval measure of 48.This means that the firm has sufficient liquid assets to do which one of the following?

Accepted Answer

A)  pay all of its debts that are due within the next 48 hours
B)  pay all of its debts that are due within the next 48 days
C)  cover its operating costs for the next 48 hours
D)  cover its operating costs for the next 48 days
E)  meet the demands of its customers for the next 48 hoursF) B) and C)
G) C) and E)

Question 11

A common-size income statement is an accounting statement that expresses all of a firm's expenses as percentage of:

Accepted Answer

A)  total assets.
B)  total equity.
C)  net income.
D)  taxable income.
E)  sales.F) B) and E)
G) C) and D)

Question 12

The Dockside Inn has net income for the most recent year of $8,450.The tax rate was 35 percent.The firm paid $1,300 in total interest expense and deducted $1,900 in depreciation expense.What was the cash coverage ratio for the year?

Accepted Answer

A)  10.48 times
B)  11.48 times
C)  12.39 times
D)  12.46 times
E)  13.07 timesF) A) and B)
G) A) and C)

Question 13

In general,what does a high Tobin's Q value indicate and how reliable does that value tend to be?

Accepted Answer

A high Tobin's Q indicates that the curr...

Question 14

The sources and uses of cash over a stated period of time are reflected on the:

Accepted Answer

A)  income statement.
B)  balance sheet.
C)  tax reconciliation statement.
D)  statement of cash flows.
E)  statement of operating position.F) C) and D)
G) All of the above D

Question 15

Dixie Supply has total assets with a current book value of $368,900 and a current replacement cost of $486,200.The market value of these assets is $464,800.What is the value of Tobin's Q?

Accepted Answer

A)  .86
B)  .92
C)  .96
D)  1.01
E)  1.06F) A) and D)
G) C) and E)

Question 16

If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

Accepted Answer

A)  0.0
B)  0.5
C)  1.0
D)  1.5
E)  2.0F) A) and C)
G) A) and B)

Question 17

Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Accepted Answer

A)  Al's has more net income than Ben's.
B)  Ben's is increasing its earnings at a faster rate than the Al's.
C)  Al's has a higher market value per share than does Ben's.
D)  Ben's has a lower market-to-book ratio than Al's.
E)  Al's has a higher net income than Ben's.F) A) and B)
G) A) and C)

Question 18

Lassiter Industries has annual sales of $220,000 with 10,000 shares of stock outstanding.The firm has a profit margin of 6 percent and a price-sales ratio of 1.20.What is the firm's price-earnings ratio?

Accepted Answer

A)  14
B)  16
C)  18
D)  20
E)  22F) B) and E)
G) A) and B)

Question 19

Big Guy Subs has net income of $150,980,a price-earnings ratio of 12.8,and earnings per share of $0.87.How many shares of stock are outstanding?

Accepted Answer

A)  13,558
B)  14,407
C)  165,523
D)  171,000
E)  173,540F) A) and C)
G) B) and E)

Question 20

The cash coverage ratio directly measures the ability of a firm's revenues to meet which one of its following obligations?

Accepted Answer

A)  payment to supplier
B)  payment to employee
C)  payment of interest to a lender
D)  payment of principle to a lender
E)  payment of a dividend to a shareholderF) None of the above
G) A) and E)

Exam 3: Working With Financial Statements

What value can the price-sales ratio provide to financial managers that the price-earnings ratio cannot?

Correct Answer
verified
The price-earnings ratio loses its value...
View Answer

Which one of the following is a use of cash?

Correct Answer
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Uptown Men's Wear has accounts payable of $2,214,inventory of $7,950,cash of $1,263,fixed assets of $8,400,accounts receivable of $3,907,and long-term debt of $4,200.What is the value of the net working capital to total assets ratio?

Correct Answer
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Lancaster Toys has a profit margin of 7.5 percent,a total asset turnover of 1.71,and a return on equity of 21.01 percent.What is the debt-equity ratio?

Correct Answer
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B

A firm has 160,000 shares of stock outstanding,sales of $1.94 million,net income of $126,400,a price-earnings ratio of 18.7,and a book value per share of $7.92.What is the market-to-book ratio?

Correct Answer
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A firm has sales of $2,190,net income of $174,net fixed assets of $1,600,and current assets of $720.The firm has $310 in inventory.What is the common-size statement value of inventory?

Correct Answer
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Correct Answer
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E

Gladstone Pavers has a long-term debt ratio of 0.6 and a current ratio of 1.6.Current liabilities are $700,sales are $4,440,the profit margin is 9.5 percent,and the return on equity is 19.5 percent.How much does the firm have in net fixed assets?

Correct Answer
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According to the Statement of Cash Flows,a decrease in accounts receivable will _ the cash flow from _ activities.

Correct Answer
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A firm has an interval measure of 48.This means that the firm has sufficient liquid assets to do which one of the following?

Correct Answer
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A common-size income statement is an accounting statement that expresses all of a firm's expenses as percentage of:

Correct Answer
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The Dockside Inn has net income for the most recent year of $8,450.The tax rate was 35 percent.The firm paid $1,300 in total interest expense and deducted $1,900 in depreciation expense.What was the cash coverage ratio for the year?

Correct Answer
verified

In general,what does a high Tobin's Q value indicate and how reliable does that value tend to be?

Correct Answer
verified
A high Tobin's Q indicates that the curr...
View Answer

The sources and uses of cash over a stated period of time are reflected on the:

Correct Answer
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D

Dixie Supply has total assets with a current book value of $368,900 and a current replacement cost of $486,200.The market value of these assets is $464,800.What is the value of Tobin's Q?

Correct Answer
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If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

Correct Answer
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Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Correct Answer
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Lassiter Industries has annual sales of $220,000 with 10,000 shares of stock outstanding.The firm has a profit margin of 6 percent and a price-sales ratio of 1.20.What is the firm's price-earnings ratio?

Correct Answer
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Big Guy Subs has net income of $150,980,a price-earnings ratio of 12.8,and earnings per share of $0.87.How many shares of stock are outstanding?

Correct Answer
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The cash coverage ratio directly measures the ability of a firm's revenues to meet which one of its following obligations?

Correct Answer
verified

Exam 3: Working With Financial Statements

What value can the price-sales ratio provide to financial managers that the price-earnings ratio cannot?

Correct AnswerverifiedThe price-earnings ratio loses its value...View AnswerShow Answer

Which one of the following is a use of cash?

Correct AnswerverifiedShow Answer

Uptown Men's Wear has accounts payable of $2,214,inventory of $7,950,cash of $1,263,fixed assets of $8,400,accounts receivable of $3,907,and long-term debt of $4,200.What is the value of the net working capital to total assets ratio?

Correct AnswerverifiedShow Answer

Lancaster Toys has a profit margin of 7.5 percent,a total asset turnover of 1.71,and a return on equity of 21.01 percent.What is the debt-equity ratio?

Correct AnswerverifiedB

A firm has 160,000 shares of stock outstanding,sales of $1.94 million,net income of $126,400,a price-earnings ratio of 18.7,and a book value per share of $7.92.What is the market-to-book ratio?

Correct AnswerverifiedShow Answer

A firm has sales of $2,190,net income of $174,net fixed assets of $1,600,and current assets of $720.The firm has $310 in inventory.What is the common-size statement value of inventory?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedE

Gladstone Pavers has a long-term debt ratio of 0.6 and a current ratio of 1.6.Current liabilities are $700,sales are $4,440,the profit margin is 9.5 percent,and the return on equity is 19.5 percent.How much does the firm have in net fixed assets?

Correct AnswerverifiedShow Answer

According to the Statement of Cash Flows,a decrease in accounts receivable will _____ the cash flow from _____ activities.

Correct AnswerverifiedShow Answer

A firm has an interval measure of 48.This means that the firm has sufficient liquid assets to do which one of the following?

Correct AnswerverifiedShow Answer

A common-size income statement is an accounting statement that expresses all of a firm's expenses as percentage of:

Correct AnswerverifiedShow Answer

The Dockside Inn has net income for the most recent year of $8,450.The tax rate was 35 percent.The firm paid $1,300 in total interest expense and deducted $1,900 in depreciation expense.What was the cash coverage ratio for the year?

Correct AnswerverifiedShow Answer

In general,what does a high Tobin's Q value indicate and how reliable does that value tend to be?

Correct AnswerverifiedA high Tobin's Q indicates that the curr...View AnswerShow Answer

The sources and uses of cash over a stated period of time are reflected on the:

Correct AnswerverifiedD

Dixie Supply has total assets with a current book value of $368,900 and a current replacement cost of $486,200.The market value of these assets is $464,800.What is the value of Tobin's Q?

Correct AnswerverifiedShow Answer

If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

Correct AnswerverifiedShow Answer

Al's has a price-earnings ratio of 18.5.Ben's also has a price-earnings ratio of 18.5.Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Correct AnswerverifiedShow Answer

Lassiter Industries has annual sales of $220,000 with 10,000 shares of stock outstanding.The firm has a profit margin of 6 percent and a price-sales ratio of 1.20.What is the firm's price-earnings ratio?

Correct AnswerverifiedShow Answer

Big Guy Subs has net income of $150,980,a price-earnings ratio of 12.8,and earnings per share of $0.87.How many shares of stock are outstanding?

Correct AnswerverifiedShow Answer

The cash coverage ratio directly measures the ability of a firm's revenues to meet which one of its following obligations?

Correct AnswerverifiedShow Answer

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The price-earnings ratio loses its value...
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B

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E

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According to the Statement of Cash Flows,a decrease in accounts receivable will _ the cash flow from _ activities.

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A high Tobin's Q indicates that the curr...
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D

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