Question 1

The ratio which includes all debts of all maturities to all creditors is called the:

Accepted Answer

A)  cash coverage ratio
B)  times interest earned ratio
C)  equity multiplier
D)  capital intensity ratio
E)  total debt ratioF) A) and E)
G) C) and D)

Question 2

Harry's Healthy Foods has total assets of $129 800,net fixed assets of $71 500,long-term debt of $52 000,and total debt of $78 700.If inventory is $31 800,what is the current ratio?

Accepted Answer

A)  0.33
B)  0.46
C)  0.84
D)  1.18
E)  2.18F) A) and B)
G) C) and D)

Question 3

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

Accepted Answer

A)  9.14 per cent
B)  10.61 per cent
C)  21.45 per cent
D)  34.61 per cent
E)  39.48 per centF) C) and D)
G) B) and D)

Question 4

Delmont Movers has a profit margin of 6.2 per cent and net income of $48 900.What is the common-size percentage for the cost of goods sold if that expense amounted to $379 000 for the year?

Accepted Answer

A)  12.90 per cent
B)  23.50 per cent
C)  33.25 per cent
D)  41.06 per cent
E)  48.05 per centF) All of the above
G) B) and D)

Question 5

The financial ratio measured as net income divided by total assets is known as a
Firm's:

Accepted Answer

A)  profit margin
B)  return on equity
C)  total asset turnover
D)  return on assets
E)  capital intensity ratioF) D) and E)
G) A) and B)

Question 6

The Noodle Place has total assets of $123 800,a debt-equity ratio of 0.65,and net income of $7100.What is the return on equity?

Accepted Answer

A)  3.48 per cent
B)  3.73 per cent
C)  8.01 per cent
D)  9.46 per cent
E)  13.61 percentF) A) and B)
G) C) and D)

Question 7

Samurai company has 8 500 000 shares issued to shareholders and the shares sell for $1.98 per share,at the end of the year.Total shareholders' equity is equal to $9 300 000.What is market-to-book ratio?

Accepted Answer

A)  0.55
B)  1.09
C)  1.81
D)  1.55
E)  0.91F) C) and D)
G) A) and D)

Question 8

The current ratio is defined as current assets:

Accepted Answer

A)  minus current liabilities
B)  plus current liabilities
C)  divided by total assets
D)  divided by current liabilities
E)  multiplied by the total asset turnoverF) A) and B)
G) None of the above

Question 9

The group of ratios which are focused on net income are referred to as:

Accepted Answer

A)  asset utilisation ratios
B)  financial leverage measures
C)  liquidity ratios
D)  market value ratios
E)  profitability measuresF) D) and E)
G) B) and D)

Question 10

The cash ratio is defined as cash divided by:

Accepted Answer

A)  current assets
B)  current liabilities
C)  total assets
D)  total debt
E)  total equityF) A) and B)
G) A) and C)

Question 11

Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing?

Accepted Answer

A)  Du Pont rate
B)  External growth rate
C)  Sustainable growth rate
D)  Internal growth rate
E)  Cash flow rateF) A) and E)
G) A) and C)

Question 12

Ratios which analyse a firm's ability to meet its long-term obligations are called:

Accepted Answer

A)  profitability ratios
B)  asset utilisation ratios
C)  leverage ratios
D)  market value ratios
E)  liquidity ratiosF) A) and E)
G) B) and E)

Question 13

Which of the following statements is correct?

Accepted Answer

A)  Peer group analysis is easier when a firm is a conglomerate rather than a single line of business.
B)  Australian listed companies can only be compared to other companies listed on the ASX.
C)  Peer group analysis is easier when firms have different fiscal years.
D)  GICS are useful in identifying companies for comparison purposes but some care must be taken.
E)  Peer-group analysis is simplified when firms use different depreciation methods.F) A) and B)
G) A) and C)

Question 14

Financial statement analysis:

Accepted Answer

A)  will always give a precise analysis of the financial health of a company
B)  is based on past results and is therefore not useful
C)  provides useful information that can serve as a basis for predicting future performance
D)  is limited to internal use by managers
E)  provides useful information to shareholders but not other stakeholdersF) B) and E)
G) D) and E)

Question 15

Short-term solvency ratios are also referred to as:

Accepted Answer

A)  leverage ratios
B)  liquidity measures
C)  utilisation ratios
D)  profitability ratios
E)  turnover ratesF) A) and D)
G) A) and B)

Question 16

The internal growth rate is best described as the __________ growth rate achievable:

Accepted Answer

A)  minimum;if the firm does not pay out any dividends
B)  minimum;if the firm maintains a constant equity multiplier
C)  maximum;without external financing of any kind
D)  maximum;without using any external equity financing,while maintaining a constant debt-equity ratio
E)  maximum;without any limits on the amount of debt financing used by the firmF) A) and C)
G) D) and E)

Question 17

A firm has net income of $5890 and interest expense of $2130.The tax rate is 34 per cent.What is the firm's times interest earned ratio?

Accepted Answer

A)  4.82
B)  5.19
C)  5.38
D)  5.67
E)  6.33F) B) and D)
G) A) and E)

Question 18

The Bondi Tourist Shop has sales of $6 000 000 per year.The accounts receivable turnover figure is 10.43 per year.What is the accounts receivable balance?

Accepted Answer

A)  $755 264
B)  $380 695
C)  $580 293
D)  $575 264
E)  $257 024F) D) and E)
G) A) and B)

Question 19

A firm has sales of $428 000 for the year.The profit margin is 3.4 per cent and the retention ratio is 60 per cent.What is the common-size percentage for the dividends paid?

Accepted Answer

A)  0.99 per cent
B)  1.18 per cent
C)  1.21 per cent
D)  1.36 per cent
E)  1.42 per centF) C) and E)
G) A) and B)

Question 20

The Du Pont identity tells us that return on equity (ROE) is affected by the:

Accepted Answer

A)  equity multiplier
B)  total asset turnover
C)  profit margin
D)  none of the given answers
E)  all of the given answersF) B) and C)
G) None of the above

Exam 3: Working With Financial Statements

Harry's Healthy Foods has total assets of $129 800,net fixed assets of $71 500,long-term debt of $52 000,and total debt of $78 700.If inventory is $31 800,what is the current ratio?

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Financial statement analysis:

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

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The internal growth rate is best described as the __________ growth rate achievable:

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A firm has sales of $428 000 for the year.The profit margin is 3.4 per cent and the retention ratio is 60 per cent.What is the common-size percentage for the dividends paid?

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The Du Pont identity tells us that return on equity (ROE) is affected by the:

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Which of the following statements is correct?

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The ratio which includes all debts of all maturities to all creditors is called the:

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Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing?

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The cash ratio is defined as cash divided by:

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Delmont Movers has a profit margin of 6.2 per cent and net income of $48 900.What is the common-size percentage for the cost of goods sold if that expense amounted to $379 000 for the year?

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A firm has net income of $5890 and interest expense of $2130.The tax rate is 34 per cent.What is the firm's times interest earned ratio?

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The current ratio is defined as current assets:

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The group of ratios which are focused on net income are referred to as:

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Short-term solvency ratios are also referred to as:

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The financial ratio measured as net income divided by total assets is known as a Firm's:

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The Bondi Tourist Shop has sales of $6 000 000 per year.The accounts receivable turnover figure is 10.43 per year.What is the accounts receivable balance?

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Ratios which analyse a firm's ability to meet its long-term obligations are called:

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The Noodle Place has total assets of $123 800,a debt-equity ratio of 0.65,and net income of $7100.What is the return on equity?

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Samurai company has 8 500 000 shares issued to shareholders and the shares sell for $1.98 per share,at the end of the year.Total shareholders' equity is equal to $9 300 000.What is market-to-book ratio?

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