Question 1

In the base year, Marley Enterprises of Vancouver had cash of $560, accounts receivable of $2,650, inventory of $4,680, and fixed assets of $12,600. This year the firm has cash of $630, accounts receivable of $3,280, inventory of $5,101, and fixed assets of $15,850. What is the common-base year value of the inventory?

Accepted Answer

A)   .25
B)   .57
C)   .65
D)   1.09
E)   1.30F) B) and C)
G) None of the above

Question 2

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

Accepted Answer

A)   $118,048
B)   $119,600
C)   $120,202
D)   $121,212
E)   $124,097F) B) and C)
G) None of the above

Question 3

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?

Accepted Answer

A)   $2,568
B)   $3,819
C)   $4,186
D)   $6,283
E)   $6,420F) D) and E)
G) C) and D)

Question 4

Use the following statement of financial position and statement of comprehensive income   What is the net cash flow from investment activity for 2018?

Accepted Answer

A)   $450 cash outflow
B)   $560 cash outflow
C)   $870 cash outflow
D)   $1,240 cash outflow
E)   $1,570 cash outflowF) None of the above
G) All of the above

Question 5

The financial ratio measured as EBIT plus depreciation, divided by interest expense, is the:

Accepted Answer

A)   Cash coverage ratio.
B)   Debt-equity ratio.
C)   Times interest earned ratio.
D)   Gross margin.
E)   Total debt ratio.F) B) and C)
G) D) and E)

Question 6

Which ratio is not a measure of long-term solvency?

Accepted Answer

A)   Total debt ratio.
B)   Price-earnings ratio.
C)   Debt/equity ratio.
D)   Equity multiplier
E)   Times interest earned.F) A) and B)
G) C) and E)

Question 7

The function described as the profit margin times the total asset turnover times the equity multiplier is known as the:

Accepted Answer

A)   Du Pont identity.
B)   Return on assets.
C)   Statement of cash flows.
D)   Asset turnover ratio.
E)   Interval measure.F) A) and E)
G) B) and E)

Question 8

A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:

Accepted Answer

A)   $1.00 in equity.
B)   $1.00 in total sales.
C)   $1.00 in current assets.
D)   $0.53 in equity.
E)   $0.53 in total assets.F) A) and B)
G) B) and D)

Question 9

What was the greatest use of funds for Bo Knows Profit Corp.?

Accepted Answer

A)   Increase in accounts receivable.
B)   Decrease in accounts payable.
C)   Acquisition of more fixed assets.
D)   Dividends.
E)   Sale of inventory.F) B) and C)
G) C) and D)

Question 10

Smith & Sons has a debt-equity ratio of.55. What is the total debt ratio?

Accepted Answer

A)   .35
B)   .46
C)   .49
D)   .51
E)   .55F) B) and D)
G) B) and C)

Question 11

During the year, Douglass Industries decreased the accounts receivable by $230, decreased the inventory by $150, and increased the accounts payable by $110. These three changes represent a _____ of cash.

Accepted Answer

A)   $270 use
B)   $490 use
C)   $190 source
D)   $270 source
E)   $490 sourceF) A) and E)
G) B) and E)

Question 12

On a common-base year financial statement, all accounts are expressed relative to the base:

Accepted Answer

A)   Year amount.
B)   Amount of sales.
C)   Amount of total assets.
D)   Net income.
E)   Net cash flow.F) None of the above
G) B) and C)

Question 13

In a common size statement, the statement of financial position may be expressed as a percentage of ____________ while the statement of comprehensive income may be expressed as a percentage of ____________.

Accepted Answer

A)   liabilities plus equity; net income
B)   assets; net income
C)   sales; liabilities plus equity
D)   liabilities plus equity; sales
E)   liabilities; salesF) A) and B)
G) B) and D)

Question 14

A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?

Accepted Answer

A)   $480
B)   $530
C)   $560
D)   $580
E)   $600F) B) and D)
G) C) and D)

Question 15

The PE ratio is defined as:

Accepted Answer

A)   Dividends per share divided by earnings per share.
B)   Earnings per share divided by dividends per share.
C)   Price per share divided by earnings per share.
D)   Earnings per share divided by price per share.
E)   Price per share divided by equity per share.F) B) and E)
G) A) and E)

Question 16

A total asset turnover measure of 1.03 means that a firm has $1.03 in:

Accepted Answer

A)   Total assets for every $1 in cash.
B)   Total assets for every $1 in total debt.
C)   Total assets for every $1 in equity.
D)   Sales for every $1 in total assets.
E)   Long-term assets for every $1 in short-term assets.F) C) and D)
G) D) and E)

Question 17

If you were to prepare a statement of cash flows, what is the cash flow from investment activities ($ in millions) ?

Accepted Answer

A)   -$1,500
B)   -$2,400 
C)   -$3,400
D)   $4,500
E)   $4,600F) A) and B)
G) None of the above

Question 18

What was the return on equity for 2018?

Accepted Answer

A)   18.3%
B)   26.1%
C)   31.4%
D)   44.8%
E)   62.6%F) A) and B)
G) B) and D)

Question 19

A firm has a debt-equity ratio of.56. What is the total debt ratio?

Accepted Answer

A)   0.29
B)   0.36
C)   0.44
D)   1.44
E)   1.56F) A) and D)
G) A) and C)

Question 20

An increase in a(n)  _____________ account would be considered a(n)  __________ of funds.

Accepted Answer

A)   Asset; source
B)   Liability; source
C)   Liabilities; use
D)   Expense; source
E)   Revenues; useF) B) and D)
G) B) and E)

Exam 3: Working With Financial Statements

Use the following statement of financial position and statement of comprehensive income What is the net cash flow from investment activity for 2018?

Correct Answer
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If you were to prepare a statement of cash flows, what is the cash flow from investment activities ($ in millions) ?

Correct Answer
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A total asset turnover measure of 1.03 means that a firm has $1.03 in:

Correct Answer
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What was the return on equity for 2018?

Correct Answer
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An increase in a(n) ___ account would be considered a(n) of funds.

Correct Answer
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In a common size statement, the statement of financial position may be expressed as a percentage of while the statement of comprehensive income may be expressed as a percentage of .

Correct Answer
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On a common-base year financial statement, all accounts are expressed relative to the base:

Correct Answer
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During the year, Douglass Industries decreased the accounts receivable by $230, decreased the inventory by $150, and increased the accounts payable by $110. These three changes represent a _____ of cash.

Correct Answer
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A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?

Correct Answer
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A firm has a debt-equity ratio of.56. What is the total debt ratio?

Correct Answer
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What was the greatest use of funds for Bo Knows Profit Corp.?

Correct Answer
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Smith & Sons has a debt-equity ratio of.55. What is the total debt ratio?

Correct Answer
verified

The financial ratio measured as EBIT plus depreciation, divided by interest expense, is the:

Correct Answer
verified

The function described as the profit margin times the total asset turnover times the equity multiplier is known as the:

Correct Answer
verified

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

Correct Answer
verified

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?

Correct Answer
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Which ratio is not a measure of long-term solvency?

Correct Answer
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A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:

Correct Answer
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Correct Answer
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The PE ratio is defined as:

Correct Answer
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Exam 3: Working With Financial Statements

Use the following statement of financial position and statement of comprehensive income What is the net cash flow from investment activity for 2018?

Correct AnswerverifiedShow Answer

If you were to prepare a statement of cash flows, what is the cash flow from investment activities ($ in millions) ?

Correct AnswerverifiedShow Answer

A total asset turnover measure of 1.03 means that a firm has $1.03 in:

Correct AnswerverifiedShow Answer

What was the return on equity for 2018?

Correct AnswerverifiedShow Answer

An increase in a(n) _____________ account would be considered a(n) __________ of funds.

Correct AnswerverifiedShow Answer

In a common size statement, the statement of financial position may be expressed as a percentage of ____________ while the statement of comprehensive income may be expressed as a percentage of ____________.

Correct AnswerverifiedShow Answer

On a common-base year financial statement, all accounts are expressed relative to the base:

Correct AnswerverifiedShow Answer

During the year, Douglass Industries decreased the accounts receivable by $230, decreased the inventory by $150, and increased the accounts payable by $110. These three changes represent a _____ of cash.

Correct AnswerverifiedShow Answer

A Halifax firm generates net income of $530. The depreciation expense is $60 and dividends paid are $80. Accounts payable decrease by $40, accounts receivable decrease by $30, inventory increases by $20, and net fixed assets decrease by $40. What is the net cash from operating activity?

Correct AnswerverifiedShow Answer

A firm has a debt-equity ratio of.56. What is the total debt ratio?

Correct AnswerverifiedShow Answer

What was the greatest use of funds for Bo Knows Profit Corp.?

Correct AnswerverifiedShow Answer

Smith & Sons has a debt-equity ratio of.55. What is the total debt ratio?

Correct AnswerverifiedShow Answer

The financial ratio measured as EBIT plus depreciation, divided by interest expense, is the:

Correct AnswerverifiedShow Answer

The function described as the profit margin times the total asset turnover times the equity multiplier is known as the:

Correct AnswerverifiedShow Answer

An Edmonton firm has a debt-equity ratio of 62 %, a total asset turnover of 1.39, and a profit margin of 7.8 %. The total equity is $672,100. What is the amount of the net income?

Correct AnswerverifiedShow Answer

Sandwiches-To-Go has a return on equity of 12 % and a debt-equity ratio of.40. The total asset turnover is 1.63 and the profit margin is 5 %. The total equity is $21,400. What is the amount of the net income?

Correct AnswerverifiedShow Answer

Which ratio is not a measure of long-term solvency?

Correct AnswerverifiedShow Answer

A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The PE ratio is defined as:

Correct AnswerverifiedShow Answer

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An increase in a(n) ___ account would be considered a(n) of funds.

Correct Answer
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In a common size statement, the statement of financial position may be expressed as a percentage of while the statement of comprehensive income may be expressed as a percentage of .

Correct Answer
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