Question 1

New Steel Products has total assets of $991,000, a total asset turnover rate of 1.1, a debt-equity ratio of 0.6, and a return on equity of 8.7 percent. What is the firm's net income?

Accepted Answer

A)   $53,885.63
B)   $58,303.33
C)   $64,624.14
D)   $70,548.09
E)   $77,236.67F) D) and E)
G) A) and B)

Question 2

Which one of the following transactions will increase the liquidity of a firm?

Accepted Answer

A)   Cash purchase of new production equipment
B)   Payment of an account payable
C)   Cash purchase of inventory
D)   Credit sale of inventory at cost
E)   Cash payment of employee wagesF) A) and E)
G) C) and E)

Question 3

A firm has $42,900 in receivables and $211,800 in total assets. The total asset turnover rate is 1.45 and the profit margin is 4.2 percent. How long on average does it take the firm to collect its receivables?

Accepted Answer

A)   7.16 days
B)   9.45 days
C)   11.68 days
D)   31.25 days
E)   50.99 daysF) None of the above
G) A) and B)

Question 4

For the most recent year, Wilson Enterprises had sales of $689,000, cost of goods sold of $470,300, depreciation expense of $61,200, and additions to retained earnings of $48,560. The firm currently has 12,000 shares of common stock outstanding, and the previous year's dividends per share were $1.18. Assuming a 35 percent tax rate, what was the times interest earned ratio?

Accepted Answer

A)   1.47
B)   2.09
C)   2.58
D)   3.15
E)   3.67F) B) and C)
G) A) and B)

Question 5

Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Accepted Answer

A)   0.04
B)   0.08
C)   0.87
D)   1.21
E)   3.45F) B) and E)
G) B) and D)

Question 6

Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio?

Accepted Answer

A)   0.88
B)   1.67
C)   3.09
D)   5.59
E)   8.10F) B) and D)
G) B) and E)

Question 7

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

Accepted Answer

A)   Price-earnings ratio
B)   Profit margin
C)   Equity multiplier
D)   Receivables turnover
E)   Quick ratioF) A) and B)
G) B) and C)

Question 8

Underwood Enterprises earns $0.07 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales. The firm pays out 20 percent of its profits to its shareholders. What is the internal growth rate?

Accepted Answer

A)   6.37 percent
B)   7.76 percent
C)   8.80 percent
D)   9.12 percent
E)   9.65 percentF) C) and D)
G) A) and C)

Question 9

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

Accepted Answer

A)   BEC
B)   SED
C)   BID
D)   SIC
E)   SBCF) D) and E)
G) None of the above

Question 10

Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800 for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the sustainable growth rate?

Accepted Answer

A)   7.38 percent
B)   8.27 percent
C)   9.11 percent
D)   9.62 percent
E)   10.38 percentF) B) and C)
G) C) and D)

Question 11

A fire has destroyed a large percentage of the financial records of the Strongwell Co. You have the task of piecing together information in order to release a financial report. You have found the return on equity to be 13.8 percent. Sales were $979,000, the total debt ratio was 0.42, and total debt was $548,000. What is the return on assets?

Accepted Answer

A)   6.92 percent
B)   8.00 percent
C)   8.45 percent
D)   9.03 percent
E)   9.29 percentF) A) and B)
G) A) and C)

Question 12

Kessler, Inc. has accounts receivable of $31,600, total assets of $311,500, cost of goods sold of $208,400, and a capital intensity ratio of 1.08. What is the accounts receivables turnover rate?

Accepted Answer

A)   8.99
B)   9.13
C)   9.42
D)   9.61
E)   9.72F) C) and D)
G) A) and B)

Question 13

Which of the following will increase the sustainable rate of growth for a firm? I. Decreasing the profit margin
II)  Increasing the dividend payout ratio
III)  Decreasing the capital intensity ratio
IV)  Increasing the target debt-equity ratio

Accepted Answer

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

Question 14

The Inside Door has total debt of $78,600, total equity of $214,000, and a return on equity of 14.5 percent. What is the return on assets?

Accepted Answer

A)   9.14 percent
B)   10.61 percent
C)   21.45 percent
D)   34.61 percent
E)   39.48 percentF) B) and E)
G) A) and B)

Question 15

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

Accepted Answer

A)   zero percent.
B)   100 percent.
C)   equal to the ROA.
D)   negative.
E)   infinite.F) C) and D)
G) D) and E)

Question 16

Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?

Accepted Answer

A)   0.22
B)   0.26
C)   0.67
D)   1.49
E)   3.85F) B) and D)
G) A) and E)

Question 17

Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of $1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal to 28 percent of sales. What is the cash coverage ratio?

Accepted Answer

A)   6.33
B)   7.51
C)   9.10
D)   10.23
E)   10.98F) A) and D)
G) B) and D)

Question 18

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

Accepted Answer

A)   5.72 percent
B)   6.84 percent
C)   7.12 percent
D)   9.58 percent
E)   10.62 percentF) None of the above
G) A) and E)

Question 19

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?

Accepted Answer

A)   0.46
B)   0.54
C)   1.21
D)   1.85
E)   2.17F) A) and E)
G) A) and B)

Question 20

Common-size financial statements present all balance sheet account values as a percentage of:

Accepted Answer

A)   the forecasted budget.
B)   sales.
C)   total equity.
D)   total assets.
E)   last year's account value.F) C) and D)
G) B) and E)

Exam 3: Working With Financial Statements

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?

Correct Answer
verified

Which of the following will increase the sustainable rate of growth for a firm? I. Decreasing the profit margin II) Increasing the dividend payout ratio III) Decreasing the capital intensity ratio IV) Increasing the target debt-equity ratio

Correct Answer
verified

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

Correct Answer
verified

A firm has $42,900 in receivables and $211,800 in total assets. The total asset turnover rate is 1.45 and the profit margin is 4.2 percent. How long on average does it take the firm to collect its receivables?

Correct Answer
verified

Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The Inside Door has total debt of $78,600, total equity of $214,000, and a return on equity of 14.5 percent. What is the return on assets?

Correct Answer
verified

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

Correct Answer
verified

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

Correct Answer
verified

Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio?

Correct Answer
verified

Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800 for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the sustainable growth rate?

Correct Answer
verified

New Steel Products has total assets of $991,000, a total asset turnover rate of 1.1, a debt-equity ratio of 0.6, and a return on equity of 8.7 percent. What is the firm's net income?

Correct Answer
verified

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

Correct Answer
verified

Kessler, Inc. has accounts receivable of $31,600, total assets of $311,500, cost of goods sold of $208,400, and a capital intensity ratio of 1.08. What is the accounts receivables turnover rate?

Correct Answer
verified

Underwood Enterprises earns $0.07 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales. The firm pays out 20 percent of its profits to its shareholders. What is the internal growth rate?

Correct Answer
verified

Common-size financial statements present all balance sheet account values as a percentage of:

Correct Answer
verified

Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Correct Answer
verified

Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of $1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal to 28 percent of sales. What is the cash coverage ratio?

Correct Answer
verified

Which one of the following transactions will increase the liquidity of a firm?

Correct Answer
verified

Exam 3: Working With Financial Statements

Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?

Correct AnswerverifiedShow Answer

Which of the following will increase the sustainable rate of growth for a firm? I. Decreasing the profit margin II) Increasing the dividend payout ratio III) Decreasing the capital intensity ratio IV) Increasing the target debt-equity ratio

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A firm has $42,900 in receivables and $211,800 in total assets. The total asset turnover rate is 1.45 and the profit margin is 4.2 percent. How long on average does it take the firm to collect its receivables?

Correct AnswerverifiedShow Answer

Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Inside Door has total debt of $78,600, total equity of $214,000, and a return on equity of 14.5 percent. What is the return on assets?

Correct AnswerverifiedShow Answer

A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 40 percent dividend payout ratio. What is the sustainable growth rate?

Correct AnswerverifiedShow Answer

Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?

Correct AnswerverifiedShow Answer

Friendly's Shoe Store has earnings before interest and taxes of $21,680 and net income of $12,542. The tax rate is 34 percent. What is the times interest earned ratio?

Correct AnswerverifiedShow Answer

Valentino's maintains a constant debt-equity ratio of 0.45. The firm had net income of $11,800 for the year and paid $6,500 in dividends. The firm has total assets of $92,000. What is the sustainable growth rate?

Correct AnswerverifiedShow Answer

New Steel Products has total assets of $991,000, a total asset turnover rate of 1.1, a debt-equity ratio of 0.6, and a return on equity of 8.7 percent. What is the firm's net income?

Correct AnswerverifiedShow Answer

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

Correct AnswerverifiedShow Answer

Kessler, Inc. has accounts receivable of $31,600, total assets of $311,500, cost of goods sold of $208,400, and a capital intensity ratio of 1.08. What is the accounts receivables turnover rate?

Correct AnswerverifiedShow Answer

Underwood Enterprises earns $0.07 in profit on every $1 of sales and has $0.67 in assets for every $1 of sales. The firm pays out 20 percent of its profits to its shareholders. What is the internal growth rate?

Correct AnswerverifiedShow Answer

Common-size financial statements present all balance sheet account values as a percentage of:

Correct AnswerverifiedShow Answer

Your firm has cash of $3,800, accounts receivable of $9,600, inventory of $33,100, and net working capital of $1,100. What is the cash ratio?

Correct AnswerverifiedShow Answer

Blue Water Cafe has $28,700 in total assets, depreciation of $3,100, and interest of $1,400. The total asset turnover rate is 1.2. Earnings before interest and taxes are equal to 28 percent of sales. What is the cash coverage ratio?

Correct AnswerverifiedShow Answer

Which one of the following transactions will increase the liquidity of a firm?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified