Finance test 4

ch3 ch3
On a common-size balance sheet all accounts are expressed as a percentage of:A. sales for the period.B. total assets for the base year.C. total assets for the current year.D. total equity for the base year.E. the base year sales. Answer Ctotal assets for the current year.
A common-size income statement is an accounting statement that expresses all of a firm’s expenses as percentage of:A. taxable income.B. net income.C. total equity.D. sales.E. total assets. D. Sales
Which one of the following is a source of cash?A. decrease in inventoryB. increase in accounts receivableC. decrease in accounts payableD. decrease in long-term debtE. decrease in common stock A. Decrease in Inventory
Which one of the following is a source of cash?A. increase in accounts payableB. increase in accounts receivableC. increase in inventoryD. decrease in notes payableE. decrease in common stock A. Increase in accounts payable
Based only on the following information for Bennington Corp., did cash go up or down? By how much? Decrease in inventory $480 Decrease in accounts payable 130 Increase in notes payable 730 Increase in accounts receivable 270 A.Cash increased by $1,070B.Cash increased by $1,350C.Cash decreased by $1,610D. Cash decreased by $810E. Cash increased by $810 Decrease in inventory is a source of cash Decrease in accounts payable is a use of cash Increase in notes payable is a source of cash Increase in accounts receivable is a use of cash Changes in cash = sources – uses = $480 – 130 + 730 – 270 = $810
Activities of a firm which require the spending of cash are known as:A. cash collections.B. cash receipts.C. cash on hand.D. uses of cash.E. sources of cash. D. Uses of cash
Shareholders probably have the most interest in which one of the following sets of ratios?A. return on assets and profit marginB. price-earnings and debt-equityC. long-term debt and times interest earnedD. return on equity and price-earningsE. market-to-book and times interest earned D. Return on equity and price-earning
According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.A. decrease; operatingB. increase; financingC. increase; investmentD. decrease; financingE. increase; operating E. Increase; Operating
High Mountain Foods has an equity multiplier of 1.55, a total asset turnover of 1.3, and a profit margin of 7.5 percent. What is the return on equity?A. 8.94 percentB. 10.87 percentC. 15.11 percentD. 12.69 percentE. 14.38 percent Return on equity = .075 × 1.3 × 1.55 = 15.11 percentROE = Profit margin total asset turnover equity multiplier
Which one of the following is a source of cash?A. granting credit to a customerB. repurchase of common stockC. selling a new debt issueD. payment to a supplierE. purchase of inventory C. Selling a new debt issue
A firm currently has $600 in debt for every $1,000 in equity. Assume the firm uses some of its cash to decrease its debt while maintaining its current equity and net income. Which one of the following will decrease as a result of this action? Equity Multiplier
An increase in which of the following will increase the return on equity, all else constant?I. salesII. net incomeIII. depreciationIV. total equity Sales and net income
The price-sales ratio is especially useful when analyzing firms that have which one of the following?A. negative earningsB. volatile market pricesC. a negative Tobin’s QD. positive PEG ratiosE. increasing sales A. Negative Earnings
An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values.A. increase in the cash ratioB. increase in the current ratioC. increase in the net working capital to total assets ratioD. decrease in the quick ratioE. decrease in the cash coverage ratio D. Decrease in quick ratio
Which one of the following is a use of cash?A. decrease in inventoryB. increase in notes payableC.decrease in common stockD. increase in long-term debtE. decrease in accounts receivables C. Decrease in common stock

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