Question 1

According to the Statement of Cash Flows, an increase in interest expense will _____ the cash flow from _____ activities.

Accepted Answer

A)  decrease; operating
B)  decrease; financing
C)  increase; operating
D)  increase; financing
E)  increase; investmentF) A) and E)
G) B) and E)

Question 2

How many days on average does it take Precision Tool to sell its inventory? (Use 2012 values)

Accepted Answer

A)  164.30 days
B)  187.77 days
C)  219.63 days
D)  247.46 days
E)  283.31 daysF) B) and E)
G) A) and B)

Question 3

Which of the following ratios are measures of a firm's liquidity?
I.cash coverage ratio
II.interval measure
III.debt-equity ratio
IV.quick ratio

Accepted Answer

A)  I and III only
B)  II and IV only
C)  I, III, and IV only
D)  I, II, and III only
E)  I, II, III, and IVF) B) and E)
G) A) and D)

Question 4

Which one of the following is a source of cash?

Accepted Answer

A)  repurchase of common stock
B)  acquisition of debt
C)  purchase of inventory
D)  payment to a supplier
E)  granting credit to a customerF) B) and E)
G) A) and B)

Question 5

Which one of the following is a source of cash?

Accepted Answer

A)  increase in accounts receivable
B)  decrease in common stock
C)  decrease in long-term debt
D)  decrease in accounts payable
E)  decrease in inventoryF) A) and B)
G) A) and C)

Question 6

Last year, which is used as the base year, a firm had cash of $52, accounts receivable of $218, inventory of $509, and net fixed assets of $1,107.This year, the firm has cash of $61, accounts receivable of $198, inventory of $527, and net fixed assets of $1,216.What is the common-base year value of accounts receivable?

Accepted Answer

A)  0.08
B)  0.10
C)  0.88
D)  0.91
E)  1.18F) C) and E)
G) A) and E)

Question 7

Russell's Deli has cash of $136, accounts receivable of $95, accounts payable of $210, and inventory of $409.What is the value of the quick ratio?

Accepted Answer

A)  0.31
B)  0.53
C)  0.71
D)  1.10
E)  1.07F) A) and E)
G) None of the above

Question 8

How many days of sales are in receivables? (Use 2012 values)

Accepted Answer

A)  17.08 days
B)  23.33 days
C)  26.49 days
D)  29.41 days
E)  33.70 daysF) C) and E)
G) C) and D)

Question 9

A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?

Accepted Answer

A)  current
B)  cash
C)  debt-equity
D)  quick
E)  total debtF) A) and B)
G) A) and C)

Question 10

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Accepted Answer

A)  return on equity
B)  return on assets
C)  profit margin
D)  total asset turnover
E)  price-earnings ratioF) C) and E)
G) C) and D)

Question 11

Wise's Corner Grocer had the following current account values.What effect did the change in net working capital have on the firm's cash flows for 2012?

Accepted Answer

A)  net use of cash of $37
B)  net use of cash of $83
C)  net source of cash of $83
D)  net source of cash of $132
E)  net source of cash of $135F) A) and E)
G) A) and C)

Question 12

A firm has total assets of $310,100 and net fixed assets of $168,500.The average daily operating costs are $2,980.What is the value of the interval measure?

Accepted Answer

A)  31.47 days
B)  47.52 days
C)  56.22 days
D)  68.05 days
E)  104.62 daysF) B) and D)
G) A) and E)

Question 13

An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Accepted Answer

A)  accounts payable
B)  cash
C)  inventory
D)  accounts receivable
E)  fixed assetsF) C) and D)
G) A) and E)

Question 14

The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level.Assume that both the cost per unit and the selling price per unit also remained constant.This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?

Accepted Answer

A)  decrease in the inventory turnover rate
B)  decrease in the net working capital turnover rate
C)  no change in the fixed asset turnover rate
D)  decrease in the day's sales in inventory
E)  no change in the total asset turnover rateF) A) and D)
G) B) and E)

Question 15

What is the amount of the dividends paid for 2012?

Accepted Answer

A)  $11,100
B)  $15,000
C)  $22,600
D)  $31,200
E)  $31,400F) B) and E)
G) B) and D)

Question 16

Which one of the following is a source of cash?

Accepted Answer

A)  increase in accounts receivable
B)  decrease in notes payable
C)  decrease in common stock
D)  increase in accounts payable
E)  increase in inventoryF) C) and D)
G) None of the above

Question 17

During the year, Kitchen Supply increased its accounts receivable by $130, decreased its inventory by $75, and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Accepted Answer

A)  $245 use of cash
B)  $165 use of cash
C)  $95 use of cash
D)  $95 source of cash
E)  $165 source of cashF) C) and D)
G) A) and B)

Question 18

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 18.7, and a book value per share of $7.92.What is the market-to-book ratio?

Accepted Answer

A)  1.87
B)  1.84
C)  2.23
D)  2.45
E)  2.57F) A) and C)
G) None of the above

Question 19

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?

Accepted Answer

A)  0.0
B)  0.5
C)  1.0
D)  1.5
E)  2.0F) D) and E)
G) A) and C)

Question 20

A firm has sales of $68,400, costs of $42,900, interest paid of $2,100, and depreciation of $6,500.The tax rate is 34 percent.What is the value of the cash coverage ratio?

Accepted Answer

A)  12.14
B)  15.24
C)  17.27
D)  23.41
E)  24.56F) A) and B)
G) C) and D)

Exam 3: Financial Statement Analysis

Correct Answer
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Which one of the following is a source of cash?

Correct Answer
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According to the Statement of Cash Flows, an increase in interest expense will _ the cash flow from _ activities.

Correct Answer
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Wise's Corner Grocer had the following current account values.What effect did the change in net working capital have on the firm's cash flows for 2012?

Correct Answer
verified

A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?

Correct Answer
verified

A firm has sales of $68,400, costs of $42,900, interest paid of $2,100, and depreciation of $6,500.The tax rate is 34 percent.What is the value of the cash coverage ratio?

Correct Answer
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An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Correct Answer
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Which one of the following is a source of cash?

Correct Answer
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Russell's Deli has cash of $136, accounts receivable of $95, accounts payable of $210, and inventory of $409.What is the value of the quick ratio?

Correct Answer
verified

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?

Correct Answer
verified

How many days on average does it take Precision Tool to sell its inventory? (Use 2012 values)

Correct Answer
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Which one of the following is a source of cash?

Correct Answer
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How many days of sales are in receivables? (Use 2012 values)

Correct Answer
verified

A firm has total assets of $310,100 and net fixed assets of $168,500.The average daily operating costs are $2,980.What is the value of the interval measure?

Correct Answer
verified

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Correct Answer
verified

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 18.7, and a book value per share of $7.92.What is the market-to-book ratio?

Correct Answer
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Which of the following ratios are measures of a firm's liquidity? I.cash coverage ratio II.interval measure III.debt-equity ratio IV.quick ratio

Correct Answer
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What is the amount of the dividends paid for 2012?

Correct Answer
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Correct Answer
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During the year, Kitchen Supply increased its accounts receivable by $130, decreased its inventory by $75, and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Correct Answer
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Exam 3: Financial Statement Analysis

Correct AnswerverifiedShow Answer

Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

According to the Statement of Cash Flows, an increase in interest expense will _____ the cash flow from _____ activities.

Correct AnswerverifiedShow Answer

Wise's Corner Grocer had the following current account values.What effect did the change in net working capital have on the firm's cash flows for 2012?

Correct AnswerverifiedShow Answer

A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?

Correct AnswerverifiedShow Answer

A firm has sales of $68,400, costs of $42,900, interest paid of $2,100, and depreciation of $6,500.The tax rate is 34 percent.What is the value of the cash coverage ratio?

Correct AnswerverifiedShow Answer

An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

Correct AnswerverifiedShow Answer

Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

Russell's Deli has cash of $136, accounts receivable of $95, accounts payable of $210, and inventory of $409.What is the value of the quick ratio?

Correct AnswerverifiedShow Answer

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?

Correct AnswerverifiedShow Answer

How many days on average does it take Precision Tool to sell its inventory? (Use 2012 values)

Correct AnswerverifiedShow Answer

Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

How many days of sales are in receivables? (Use 2012 values)

Correct AnswerverifiedShow Answer

A firm has total assets of $310,100 and net fixed assets of $168,500.The average daily operating costs are $2,980.What is the value of the interval measure?

Correct AnswerverifiedShow Answer

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Correct AnswerverifiedShow Answer

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 18.7, and a book value per share of $7.92.What is the market-to-book ratio?

Correct AnswerverifiedShow Answer

Which of the following ratios are measures of a firm's liquidity? I.cash coverage ratio II.interval measure III.debt-equity ratio IV.quick ratio

Correct AnswerverifiedShow Answer

What is the amount of the dividends paid for 2012?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

During the year, Kitchen Supply increased its accounts receivable by $130, decreased its inventory by $75, and decreased its accounts payable by $40.How did these three accounts affect the firm's cash flows for the year?

Correct AnswerverifiedShow Answer

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verified

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According to the Statement of Cash Flows, an increase in interest expense will _ the cash flow from _ activities.

Correct Answer
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