公司财务管理习题

1、Chapter 03Working with Financial Statements Multiple Choice Questions1.Common-size financial statements present all balance sheet account values as a percentage of:A.the forecasted budget.B.sales.C.total equity.D.total assets.E.last years account value.2.The ratios that are based on financial statem

2、ent values and used for comparison purposes are called:A.financial ratios.B.industrial statistics.C.equity standards.D.accounting returns.E.analytical standards.3.The Du Pont identity can be totally defined by which one of the following?A.Return on equity, total asset turnover, and equity multiplier

3、B.Equity multiplier and return on assetsC.Profit margin and return on equityD.Total asset turnover, profit margin, and debt-equity ratioE.Equity multiplier, return on assets, and profit margin4.Which one of the following is the maximum growth rate that a firm can achieve without any additional exter

4、nal financing?A.Du Pont rateB.External growth rateC.Sustainable growth rateD.Internal growth rateE.Cash flow rate5.The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions?A.No new external financing of any kindB.No new debt but addi

5、tional external equity equal to the increase in retained earningsC.New debt and external equity in equal proportionsD.New debt and external equity, provided the debt-equity ratio remains constantE.No new equity and a constant debt-equity ratio6.Which one of the following is the abbreviation for the

6、U.S. government coding system that classifies a firm by its specific type of business operations?A.BECB.SEDC.BIDD.SICE.SBC7.Builders Outlet just hired a new chief financial officer. To get a feel for the company, she wants to compare the firms sales and costs over the past 3 years determine if any t

7、rends are present and also determine where the firm might need to make changes. Which one of the following statements will best suit her purposes?A.Income statementB.Balance sheetC.Common-size income statementD.Common-size balance sheetE.Statement of cash flows8.A common-size balance sheet helps fin

8、ancial managers determine:A.which customers are paying on a timely basis.B.if costs are increasing faster or slower than sales.C.if changes are occurring in a firms mix of assets.D.if a firm is generating more or less sales per dollar of assets than in prior years.E.the rate at which the firms divid

9、ends are changing.9.High Tower Pharmacy pays a fixed percentage of its net income out to its shareholders in the form of annual dividends. Given this, the percent shown on a common-size income statement for the dividend account will:A.remain constant over time.B.be equal to the dividend amount divid

10、ed by the net income.C.vary in direct relation to the net profit percentage.D.vary in direct relation to changes in the sales level.E.vary but not in direct relation to any other variable.10.Which one of the following transactions will increase the liquidity of a firm?A.Cash purchase of new producti

11、on equipmentB.Payment of an account payableC.Cash purchase of inventoryD.Credit sale of inventory at costE.Cash payment of employee wages11.Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0.A.Cash purchase of inventory

12、B.Cash payment of an account receivableC.Cash payment of an account payableD.Credit sale of inventory at costE.Cash sale of inventory at a loss12.A firm has a current ratio of 1.4 and a quick ratio of 0.9. Given this, you know for certain that the firm:A.pays cash for its inventory.B.has more than h

13、alf its current assets invested in inventory.C.has more cash than inventory.D.has more current liabilities than it does current assets.E.has positive net working capital.13.Fred is the owner of a local feed store. Which one of the following ratios should he compute if he wants to know how long the s

14、tore can pay its bills given the amount of cash the store currently has?A.Current ratioB.Debt ratioC.Cash coverage ratioD.Quick ratioE.Cash ratio14.Which one of the following is a measure of long-term solvency?A.Price-earnings ratioB.Profit marginC.Equity multiplierD.Receivables turnoverE.Quick rati

15、o15.The cash coverage ratio is used to evaluate the:A.liquidity of a firm.B.speed at which a firm generates cash.C.length of time that a firm can pay its bills if no additional cash becomes available.D.ability of a firm to pay the interest on its debt.E.relationship between the firms cash balance an

16、d its current liabilities.16.The equity multiplier is equal to:A.one plus the debt-equity ratio.B.one plus the total asset turnover.C.total debt divided by total equity.D.total equity divided by total assets.E.one divided by the total asset turnover.17.Blooming Gardens has an inventory turnover of 1

17、6. This means the firm:A.sells its entire inventory every 16 days.B.only stocks its inventory every 16 days.C.buys 16 days of inventory with each order.D.sells its inventory by granting customers 16 days credit.E.sells its inventory an average of 16 times each year.18.Which one of the following best

18、 indicates a firm is utilizing its assets more efficiently than it has in the past?A.Decrease in the total asset turnoverB.Decrease in the capital intensity ratioC.Increase in days sales in receivablesD.Decrease in the profit marginE.Decrease in the inventory turnover rate19.Kelsos Pharmacy generate

19、s $2 in sales for every $1 the firm has invested in total assets. Which one of the following ratios would reflect this relationship?A.Receivables turnoverB.Equity multiplierC.Profit marginD.Return on assetsE.Total asset turnover20.Which one of the following will increase the profit margin of a firm,

20、 all else constant?A.Increase in interest paidB.Increase in fixed costsC.Increase in depreciation expenseD.Decrease in the tax rateE.Decrease in sales21.You would like to borrow money three years from now to build a new building. In preparation for applying for that loan, you are in the process of d

21、eveloping target ratios for your firm. Which set of ratios represents the best target mix considering that you want to obtain outside financing in the relatively near future?A.Times interest earned = 1.7; debt-equity ratio = 1.6B.Times interest earned = 1.5; debt-equity ratio = 1.2C.Cash coverage ra

22、tio = 0.8; debt-equity ratio = 0.8D.Cash coverage ratio = 2.6; debt-equity ratio = 0.3E.Cash coverage ratio = 0.5; total debt ratio = 0.222.All else constant, which one of the following will decrease if a firm increases its net income?A.Return on assetsB.Profit marginC.Return on equityD.Price-sales

23、ratioE.Price-earnings ratio23.Which one of the following statements is true concerning the price-earnings (PE) ratio?A.A high PE ratio may indicate that a firm is expected to grow significantly.B.A PE ratio of 16 indicates that investors are willing to pay $1 for every $16 of current earnings.C.PE r

24、atios are unaffected by the accounting methods employed by a firm.D.The PE ratio is classified as a profitability ratio.E.The PE ratio is a constant value for each firm.24.New Century Products is a company that was founded last year. While the outlook for the company is positive, it currently has ne

25、gative earnings. If you wanted to measure the progress of this firm, which one of the following ratios would probably be best to monitor given the firms current situation?A.Price-sales ratioB.Market-to-book ratioC.Profit marginD.ROEE.ROA25.The Du Pont identity can be used to help a financial manager

26、 determine the: I. degree of financial leverage used by a firm.II. operating efficiency of a firm.III. utilization rate of a firms assets.IV. rate of return on a firms assets.A.II and III onlyB.I and III onlyC.II, III, and IV onlyD.I, II, and III onlyE.I, II, III, and IV26.The T-shirt Hut successful

27、ly managed to reduce its general and administrative costs this year. This cost improvement will increase which of the following ratios? I. Profit marginII. Return on assetsIII. Total asset turnoverIV. Return on equityA.I and II onlyB.I and III onlyC.II, III, and IV onlyD.I, II, and IV onlyE.I, II, I

28、II, and IV27.Marthas Sweet Shop reduced its fixed assets this year without affecting the shops operations, sales, or equity. This reduction will increase which of the following ratios? I. Capital intensity ratioII. Return on assetsIII. Total asset turnoverIV. Return on equityA.I and II onlyB.II and

29、III onlyC.II, III, and IV onlyD.I, II, and IV onlyE.I, II, III, and IV28.Donovan Brothers, Inc. would like to increase its internal rate of growth. Decreasing which one of the following will help the firm achieve its goal?A.Return on assetsB.Net incomeC.Retention ratioD.Dividend payout ratioE.Return

30、 on equity29.If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:A.zero percent.B.100 percent.C.equal to the ROA.D.negative.E.infinite.30.Which of the following are determinants of a firms sustainable rate of growth? I. Amount of sales generated from each

31、dollar invested in assetsII. Amount of debt per dollar of equityIII. Amount of current assets per dollar of current liabilitiesIV. Percent of net income distributed as dividendsA.I and III onlyB.II and IV onlyC.I, II, and IV onlyD.II, III, and IV onlyE.I, II, III, and IV31.Which of the following wil

32、l increase the sustainable rate of growth for a firm? I. Decreasing the profit marginII. Increasing the dividend payout ratioIII. Decreasing the capital intensity ratioIV. Increasing the target debt-equity ratioA.I and II onlyB.III and IV onlyC.II and IV onlyD.I, III, and IV onlyE.I, II, III, and IV

33、32.Financial statement analysis:A.is primarily used to identify account values that meet the normal standards.B.is limited to internal use by a firms managers.C.provides useful information that can serve as a basis for forecasting future performance.D.provides useful information to shareholders but

34、not to debt holders.E.is enhanced by comparing results to those of a firms peers but not by comparing results to prior periods.33.Which one of the following statements is correct?A.Peer group analysis is easier when a firm is a conglomerate versus when it only has a singleB.line of business.C.Peer g

35、roup analysis is easier when seasonal firms have different fiscal years.D.Peer group analysis is simplified when firms use varying methods of depreciation.E.Comparing results across geographic locations is easier since all countries now use a commonF.set of accounting standards.G.Adjustments have to

36、 be made when comparing the income statements of firms which use different methods of accounting for inventory.34.Russells Hardware has inventory of $218,000, equity of $421,800, total assets of $647,700, and sales of $587,200. What is the common-size percentage for the inventory account?A.26.81 per

37、centB.33.66 percentC.37.12 percentD.49.09 percentE.51.68 percent35.A firm has inventory of $11,400, accounts payable of $9,800, cash of $850, net fixed assets of $12,150, long-term debt of $9,500, accounts receivable of $6,600, and total equity of $11,700. What is the common-size percentage for the

38、net fixed assets?A.19.60 percentB.26.67 percentC.39.19 percentD.42.08 percentE.48.75 percent36.Foreign Travel Services has net income of $48,400, total assets of $219,000, total equity of $154,800, and total sales of $311,700. What is the common-size percentage for the net income?A.9.00 percentB.13.

39、90 percentC.15.53 percentD.22.10 percentE.31.27 percent37.Delmont Movers has a profit margin of 6.2 percent 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?A.12.90 percentB.23.50 percentC.33.25 percentD.41.06

40、percentE.48.05 percent38.A firm has sales of $428,000 for the year. The profit margin is 3.4 percent and the retention ratio is 60 percent. What is the common-size percentage for the dividends paid?A.0.99 percentB.1.18 percentC.1.21 percentD.1.36 percentE.1.42 percent39.Peters Motor Works has total

41、assets of $689,400, long-term debt of $299,500, total equity of $275,000, net fixed assets of $497,800, and sales of $721,500. The profit margin is 4.6 percent. What is the current ratio?A.0.60B.0.91C.1.01D.1.67E.2.1640.Healthy Foods has total assets of $129,800, net fixed assets of $71,500, long-te

42、rm debt of $52,000, and total debt of $78,700. If inventory is $31,800, what is the current ratio?A.0.33B.0.46C.0.84D.1.18E.2.1841.A firm has net working capital of $3,800 and current assets of $11,700. What is the current ratio?A.0.34B.0.60C.1.48D.1.65E.2.9242.Slightly Used Goods has cash of $2,150

43、, inventory of $28,470, fixed assets of $9,860, accounts payable of $11,900, and accounts receivable of $4,660. What is the cash ratio?A.0.08B.0.18C.0.32D.0.46E.0.5143.You are analyzing a company that has cash of $11,200, accounts receivable of $27,800, fixed assets of $124,600, accounts payable of

44、$31,300, and inventory of $56,900. What is the quick ratio?A.0.30B.0.67C.0.80D.1.25E.1.3744.Tasty Dee-Lite has current liabilities of $6,630, net working capital of $2,180, inventory of $2,750, and sales of $36,800. What is the quick ratio?A.0.76B.0.84C.0.91D.1.09E.1.1945.Tressler Dry Cleaners has i

45、nventory of $1,700, accounts payable of $4,200, cash of $1,950, and accounts receivable of $3,680. What is the cash ratio?A.0.24B.0.46C.0.53D.0.98E.1.3446.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?A.0.

46、04B.0.08C.0.87D.1.21E.3.4547.Wilsons Realty has total assets of $46,800, net fixed assets of $37,400, current liabilities of $6,100, and long-term liabilities of $24,600. What is the total debt ratio?A.0.41B.0.60C.0.66D.0.78E.0.8648.Denton, Inc. has total equity of $389,600, long-term debt of $116,4

47、00, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?A.0.22B.0.26C.0.67D.1.49E.3.8549.A firm has total assets of $523,100, current assets of $186,500, current liabilities of $141,000, and total debt of $215,000. What is the debt-equity ratio?A.0.48B.0.70C.1.1

48、0D.1.43E.2.1350.The Jelly Jar has total assets of $79,600 and an equity multiplier of 1.35. What is the debt-equity ratio?A.0.28B.0.35C.0.47D.0.58E.0.6751.Underwood Homes Sales has total assets of $589,900 and total debt of $318,000. What is the equity multiplier?A.0.46B.0.54C.1.21D.1.85E.2.1752.A f

49、irm has an equity multiplier of 1.5. This means that the firm has a:A.debt-equity ratio of 0.67.B.debt-equity ratio of 0.33.C.total debt ratio of 0.50.D.total debt ratio of 0.67.E.total debt ratio of 0.33.53.Prestons Market has sales of $213,600, total assets of $198,700, a debt-equity ratio of 1.6,

50、 and a profit margin of 2.4 percent. What is the equity multiplier?A.0.60B.0.63C.1.83D.2.60E.2.8454.Friendlys 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?A.0.88B.1.67C.3.09D.5.59E.8.1055.T

51、he Berry Patch has sales of $438,000, cost of goods sold of $369,000, depreciation of $37,400, and interest expense of $13,800. The tax rate is 35 percent. What is the times interest earned ratio?A.2.29B.3.46C.3.87D.4.38E.4.7956.A firm has net income of $5,890 and interest expense of $2,130. The tax

52、 rate is 34 percent. What is the firms times interest earned ratio?A.4.82B.5.19C.5.38D.5.67E.6.3357.A firm has net income of $31,300, depreciation of $5,100, taxes of $14,600, and interest paid of $3,100. What is the cash coverage ratio?A.8.78B.10.10C.14.14D.16.32E.17.4558.Blue Water Cafe has $28,70

53、0 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?A.6.33B.7.51C.9.10D.10.23E.10.9859.The Global Network has sales of $418,700, cost of goods sol

54、d of $264,900, and inventory of $61,900. What is the inventory turnover rate?A.1.33B.4.28C.6.76D.7.14E.8.4760.The Tourist Stop takes an average of 63 days to sell its inventory and an average of 1.5 days to collect payment on its sales. What is the inventory turnover rate?A.5.79B.7.29C.8.68D.10.18E.

55、11.4261.Galaxy Sales has sales of $746,700, cost of goods sold of $603,200, and inventory of $94,300. How long on average does it take the firm to sell its inventory?A.6.40 daysB.7.23 daysC.48.68 daysD.57.06 daysE.61.10 days62.Handy Hardware sells its inventory in 85 days, on average. Costs of goods sold for the year are $631,800. What