Question 1

The Donut Hut has sales of $68,000,current assets of $11,300,net income of $5,100,net fixed assets of $54,900,total debt of $23,800,and dividends of $800.What is the sustainable growth rate?

Accepted Answer

A)  10.48 percent
B)  11.29 percent
C)  11.79 percent
D)  12.08 percent
E)  12.39 percentF) A) and D)
G) A) and C)

Question 2

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)  infiniteF) A) and C)
G) D) and E)

Question 3

For the most recent year,Wilson Enterprises had sales of $689,000,cost of goods sold of $492,300,depreciation expense of $61,200,additions to retained earnings of $48,560,and dividends per share of $2.18.There are 12,000 shares of common stock outstanding and the tax rate is 35 percent.What is the times interest earned ratio?

Accepted Answer

A)  5.47
B)  5.09
C)  6.59
D)  7.15
E)  3.67F) A) and C)
G) B) and D)

Question 4

Which ratio was primarily designed to monitor firms with negative earnings?

Accepted Answer

A)  Price-sales ratio
B)  Market-to-book ratio
C)  Profit margin
D)  ROE
E)  ROAF) B) and D)
G) All of the above

Question 5

Lookin'Up earns $.094 in profit on every $1 of sales and has $1.21 in assets for every $1 of sales.The firm pays out 45 percent of its profits to its shareholders.What is the internal growth rate?

Accepted Answer

A)  6.37 percent
B)  2.76 percent
C)  3.82 percent
D)  4.46 percent
E)  2.65 percentF) B) and E)
G) B) and D)

Question 6

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

Accepted Answer

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

Question 7

The Inside Door has total debt of $208,600,total equity of $343,560,and a return on equity of 13.27 percent.What is the return on assets?

Accepted Answer

A)  9.14 percent
B)  8.26 percent
C)  11.45 percent
D)  9.61 percent
E)  9.48 percentF) B) and C)
G) A) and B)

Question 8

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 .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) B) and D)
G) None of the above

Question 9

Motor Works has total assets of $919,200,long-term debt of $264,500,total equity of $466,900,net fixed assets of $682,800,and sales of $1,021,500.The profit margin is 6.2 percent.What is the current ratio?

Accepted Answer

A)  .79
B)  .84
C)  1.01
D)  1.26
E)  1.19F) A) and E)
G) A) and B)

Question 10

Donovan&rsquo;s would like to increase its internal rate of growth.Decreasing which one of the following will help the firm achieve its goal?

Accepted Answer

A)  Return on assets
B)  Net income
C)  Retention ratio
D)  Dividend payout ratio
E)  Return on equityF) A) and D)
G) C) and E)

Question 11

Financial statement analysis:

Accepted Answer

A)  is primarily used to identify account values that meet the normal standards.
B)  is limited to internal use by a firm's managers.
C)  provides useful information that can serve as a basis for forecasting future performance.
D)  provides useful information to shareholders but not to debtholders.
E)  is enhanced by comparing results to those of a firm's peers but not by comparing results to prior periodsF) B) and D)
G) A) and B)

Question 12

Deep Sea Fisheries has current liabilities of $238,620,net working capital of $42,580,inventory of $262,750,and sales of $1,941,840.What is the quick ratio?

Accepted Answer

A)  .79
B)  .34
C)  .08
D)  2.94
E)  12.93F) B) and C)
G) A) and B)

Question 13

Builder's Outlet just hired a new chief financial officer.To get a feel for the company,she wants to compare the firm's sales and costs over the past three years to determine if any trends are present and also determine where the firm might need to make changes.Which one of the following statements will best suit her purposes?

Accepted Answer

A)  Income statement
B)  Balance sheet
C)  Common-size income statement
D)  Common-size balance sheet
E)  Statement of cash flowsF) A) and D)
G) B) and D)

Question 14

Mistletoe Gifts has $93,840 in total assets,depreciation of $2,106,and interest of $1,214.The total asset turnover rate is .94.Earnings before interest and taxes are equal to 19 percent of sales.What is the cash coverage ratio?

Accepted Answer

A)  6.33
B)  7.51
C)  15.54
D)  10.23
E)  13.98F) C) and D)
G) A) and E)

Question 15

Allison's Trees has total assets of $846,200 and total debt of $367,500.What is the equity multiplier?

Accepted Answer

A)  .46
B)  .57
C)  2.17
D)  1.85
E)  1.77F) C) and E)
G) A) and B)

Question 16

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 valueF) B) and E)
G) B) and C)

Question 17

Which one of the following actions will increase the current ratio,all else constant? Assume the current ratio is greater than 1.0.

Accepted Answer

A)  Cash purchase of inventory
B)  Cash payment on an account receivable
C)  Cash payment of an account payable
D)  Credit sale of inventory at cost
E)  Cash sale of inventory at a lossF) A) and B)
G) A) and C)

Question 18

Sunshine Rentals has a debt-equity ratio of .67.The return on assets is 8.1 percent,and total equity is $595,000.What is the net income?

Accepted Answer

A)  $82,147.09
B)  $81,311.29
C)  $80,485.65
D)  $78,887.02
E)  $83,013.69F) A) and C)
G) A) and D)

Question 19

The Saw Mill has a return on assets of 7.92 percent,a total asset turnover rate of 1.18,and a debt-equity ratio of 1.46.What is the return on equity?

Accepted Answer

A)  14.26 percent
B)  13.64 percent
C)  12.28 percent
D)  19.48 percent
E)  12.03 percentF) C) and D)
G) A) and E)

Exam 3: Working With Financial Statements

Deep Sea Fisheries has current liabilities of $238,620,net working capital of $42,580,inventory of $262,750,and sales of $1,941,840.What is the quick ratio?

Correct Answer
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Lookin'Up earns $.094 in profit on every $1 of sales and has $1.21 in assets for every $1 of sales.The firm pays out 45 percent of its profits to its shareholders.What is the internal growth rate?

Correct Answer
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Financial statement analysis:

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

Correct Answer
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Which one of the following actions will increase the current ratio,all else constant? Assume the current ratio is greater than 1.0.

Correct Answer
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Mistletoe Gifts has $93,840 in total assets,depreciation of $2,106,and interest of $1,214.The total asset turnover rate is .94.Earnings before interest and taxes are equal to 19 percent of sales.What is the cash coverage ratio?

Correct Answer
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The Saw Mill has a return on assets of 7.92 percent,a total asset turnover rate of 1.18,and a debt-equity ratio of 1.46.What is the return on equity?

Correct Answer
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Motor Works has total assets of $919,200,long-term debt of $264,500,total equity of $466,900,net fixed assets of $682,800,and sales of $1,021,500.The profit margin is 6.2 percent.What is the current ratio?

Correct Answer
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Donovan’s would like to increase its internal rate of growth.Decreasing which one of the following will help the firm achieve its goal?

Correct Answer
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Which ratio was primarily designed to monitor firms with negative earnings?

Correct Answer
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The Donut Hut has sales of $68,000,current assets of $11,300,net income of $5,100,net fixed assets of $54,900,total debt of $23,800,and dividends of $800.What is the sustainable growth rate?

Correct Answer
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Allison's Trees has total assets of $846,200 and total debt of $367,500.What is the equity multiplier?

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

Correct Answer
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Sunshine Rentals has a debt-equity ratio of .67.The return on assets is 8.1 percent,and total equity is $595,000.What is the net income?

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

Correct Answer
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The Inside Door has total debt of $208,600,total equity of $343,560,and a return on equity of 13.27 percent.What is the return on assets?

Correct Answer
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Exam 3: Working With Financial Statements

Deep Sea Fisheries has current liabilities of $238,620,net working capital of $42,580,inventory of $262,750,and sales of $1,941,840.What is the quick ratio?

Correct AnswerverifiedShow Answer

Lookin'Up earns $.094 in profit on every $1 of sales and has $1.21 in assets for every $1 of sales.The firm pays out 45 percent of its profits to its shareholders.What is the internal growth rate?

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Financial statement analysis:

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following actions will increase the current ratio,all else constant? Assume the current ratio is greater than 1.0.

Correct AnswerverifiedShow Answer

Mistletoe Gifts has $93,840 in total assets,depreciation of $2,106,and interest of $1,214.The total asset turnover rate is .94.Earnings before interest and taxes are equal to 19 percent of sales.What is the cash coverage ratio?

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The Saw Mill has a return on assets of 7.92 percent,a total asset turnover rate of 1.18,and a debt-equity ratio of 1.46.What is the return on equity?

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Motor Works has total assets of $919,200,long-term debt of $264,500,total equity of $466,900,net fixed assets of $682,800,and sales of $1,021,500.The profit margin is 6.2 percent.What is the current ratio?

Correct AnswerverifiedShow Answer

Donovan’s would like to increase its internal rate of growth.Decreasing which one of the following will help the firm achieve its goal?

Correct AnswerverifiedShow Answer

Which ratio was primarily designed to monitor firms with negative earnings?

Correct AnswerverifiedShow Answer

The Donut Hut has sales of $68,000,current assets of $11,300,net income of $5,100,net fixed assets of $54,900,total debt of $23,800,and dividends of $800.What is the sustainable growth rate?

Correct AnswerverifiedShow Answer

Allison's Trees has total assets of $846,200 and total debt of $367,500.What is the equity multiplier?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Sunshine Rentals has a debt-equity ratio of .67.The return on assets is 8.1 percent,and total equity is $595,000.What is the net income?

Correct AnswerverifiedShow Answer

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

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The Inside Door has total debt of $208,600,total equity of $343,560,and a return on equity of 13.27 percent.What is the return on assets?

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