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Exam 3: Financial Analysis

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Question 1

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Complete the following balance sheet for the Range Company using the following information: Debt to Assets = 60% Quick Ratio = 1.1 Asset Turnover = 5x Capital Asset Turnover = 12.037x Current Ratio = 2 Average Collection Period = 17.0708 days

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Assume all sales ar...

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Question 2

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Disinflation may cause:

A) an increase in the value of gold,silver,and gems.
B) a reduced required return demanded by investors on financial assets.
C) increased return demanded by investors on non-financial assets.
D) additional profits through rising inventory costs.

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Question 3

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Which of the following is not a debt utilization ratio?

Industries most sensitive to inflation-induced profits are those with cyclical products such as lumber,copper,etc.

If a firm has both interest expense and lease payments:

For a given level of profitability as measured by profit margin,the firm's return on equity will:

FIFO will cause inflated profits during deflation.

If the company's accounts receivable turnover is decreasing,the average collection period:

A non-Canadian company experiencing rapid price increases for its product would take the most conservative approach by using:

The current ratio is a more severe test of a firm's liquidity than the quick ratio.

Satisfactory return on assets may be achieved through high profit margins or rapid turnover of assets,but not a combination of both.

A current ratio of 2 to 1 is always acceptable,for a company in any industry.

A firm has a debt to equity ratio of 50%,debt of $300,000,and net income of $90,000.The return on equity is:

Asset utilization ratios can be used to measure the effectiveness of a firm's managers.

$\begin{array}{l}\text { LIABILITIES AND SHAREHOLDERS' EQUITY }\\\begin{array} { l r } \text { Accounts payable } & \$ 60,000 \\\text { Accrued expenses } & 40,000 \\\text { Long-term debt } & 130,000 \\\text { Common stock } & 80,000 \\\text { Retained earnings } & \underline { 100,000 } \\\text { Total Liabilities and Shareholders' Equity } & \underline { \$ 410,000 }\end{array}\end{array}$ -Times interest earned for Megaframe Computer is:

According the DuPont system,which of the following is not a factor in achieving a satisfactory return on assets?

$\begin{array}{l}\text { LIABILITIES AND SHAREHOLDERS' EQUITY }\\\begin{array} { l r } \text { Accounts payable } & \$ 60,000 \\\text { Accrued expenses } & 40,000 \\\text { Long-term debt } & 130,000 \\\text { Common stock } & 80,000 \\\text { Retained earnings } & \underline { 100,000 } \\\text { Total Liabilities and Shareholders' Equity } & \underline { \$ 410,000 }\end{array}\end{array}$ -Megaframe's current ratio is:

If a company has a return on investment of 17%,and its equity multiplier is 1.75,its ROE would be _______?

In analyzing ratios,the age of the firm's assets need not be considered.

A quick ratio much smaller than the current ratio reflects: