Chapter 3 DSM Business Finance Blaylock

Company Y’s current stock price is $51.50 per share and the company’s most recent earnings were $2.32 a share. What is Company Y’s P/E ratio? CORRECT ANSWER:22.2 times
Which of the following is considered to be a financing activity? Making a dividend payment
DuPont analysis relates ROE to: profitability, asset efficiency and leverage
What is the market capitalization of Company ABC with a most recent stock price of $11.25, and the company has 8.1 million shares of common stock outstanding? $91.125 million
Retained earnings are the sum of: previous years’ of earnings less dividends
A firm with 18.25 days sales in inventory has an inventory turnover of: 20
What is Company Z’s profit margin if sales were $45 million and net income was $2.7 million? 6%
Net working capital equals: current assets minus current liabilities
EBITDA, or earnings before interest, taxes, depreciation and amortization, shows how much cash a firm has earned from: operations
XYZ corporation has total debt of $255 million and total assets of $600 million. What is XYZ’s debt to equity ratio? .74You calculate the debt to equity ratio by taking total debt of $255 million and dividing by total equity of $345 million ($600 million in assets minus $255 million in debt means the remaining $345 million is equity). So, 255 / 345 = .74. The other answers are all incorrect answers you might get using these same numbers.
Financial statements also have extensive notes where companies provide additional information such as: details on leasing activities
Any publicly-traded U.S. firm must file quarterly financial statements and annual financial statements with the __________ and also send an annual report that includes their financial statements to their shareholders. U.S. Securities and Exchange Commission
The three main financial statements are the balance sheet, the income statement and the statement of cash flows. However, there is a fourth financial statement known as the: statement of stockholders’ equity
Since accounting principles differ among countries, the overall global trend is for firms to begin using: International Financial Reporting Standards
One of the largest accounting scandals of the past 20 years, which was involved in the bankruptcy of an energy trading firm, is: Enron
Accountants prepare financial statements using a set of guidelines established by the profession to ensure that all financial statements are comparable. These guidelines are known as: generally accepted accounting principles
Accounts receivable are: credit sales that have not been collected
The financial statements include an introduction known as the management discussion and analysis. This preface must contain information about: off-balance sheet transactions
The market-to-book ratio is the ratio of: market value of equity to the accounting value of equity
Which type of income may be distributed to the company’s owners or reinvested in the company? Net income
Current assets minus inventories over current liabilities is called the: acid-test ratio
Which of the following is considered a current liability? Accounts payable
The Sarbanes-Oxley Act attempts to improve the accuracy of information given to both boards and shareholders by: stiffening penalties for false information

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