1. Branch Corp.'s total assets at the end of last year were $315,000 and its net income after taxes was $22,750. What was its return on total assets? (Points : 2) |
[removed] 7.22%
[removed] 7.58%
[removed] 7.96%
[removed] 8.36%
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Question 2. 2. Vang Corp.'s stock price at the end of last year was $33.50 and its earnings per share for the year were $2.30. What was its P/E ratio? (Points : 2) |
[removed] 13.84
[removed] 14.57
[removed] 15.29
[removed] 16.06
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Question 3. 3. Pace Corp.'s assets are $625,000, and its total debt outstanding is $185,000. The new CFO wants to employ a debt ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio? (Points : 2) |
[removed] $158,750
[removed] $166,688
[removed] $175,022
[removed] $183,773
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Question 4. 4. Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio? (Points : 2) |
[removed] 4.72
[removed] 4.97
[removed] 5.23
[removed] 5.80
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Question 5. 5. An investor is considering starting a new business. The company would require $475,000 of assets, and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROI of 13.5%. How much net income must be expected to warrant starting the business?
(Points : 2) |
[removed] $52,230
[removed] $54,979
[removed] $57,873
[removed] $64,125
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Question 6. 6. High current and quick ratios always indicate that a firm is managing its liquidity position well. (Points : 2) |
[removed] True
[removed] False
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Question 7. 7. Debt management ratios show the extent to which a firm's managers are attempting to magnify returns on owners' capital through the use of financial leverage. (Points : 2) |
[removed] True
[removed] False
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Question 8. 8. Which of the following statements is CORRECT? (Points : 2) |
[removed] The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders’ equity.
[removed] The balance sheet gives us a picture of the firm’s financial position at a point in time.
[removed] The income statement gives us a picture of the firm’s financial position at a point in time.
[removed] The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits.
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Question 9. 9. Which of the following would indicate an improvement in a company’s financial position, holding other things constant? (Points : 2) |
[removed] The inventory and total assets turnover ratios both decline.
[removed] The debt ratio increases.
[removed] The profit margin declines.
[removed] The current and quick ratios both increase.
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Question 10. 10. Which of the following statements is CORRECT? (Points : 2) |
[removed] A reduction in inventories held would have no effect on the current ratio.
[removed] An increase in inventories would have no effect on the current ratio.
[removed] If a firm increases its sales while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase.
[removed] A reduction in the inventory turnover ratio will generally lead to an increase in the ROE.
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neel
12 years ago
gb550_unit_2_quiz.docx
