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The firm?s price-earnings (P/E) ratio is influenced by its A.capital structure. B.earnings volatility. C.sales, profit margins, and earnings. D.all of these.

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art 1 of 1 - Week 1 Quiz;Question 1 of 25;4.0 Points;The firm?s price-earnings (P/E) ratio is influenced by its;A.capital structure.;B.earnings volatility.;C.sales, profit margins, and earnings.;D.all of these.;Question 2 of 25;4.0 Points;The primary disadvantage of accrual accounting is that;A.it does not match revenues and expenses in the period in which they are incurred.;B.it does not appropriately measure accounting profit.;C.it does not recognize accounts receivable.;D.it does not adequately show the actual cash flow position of the firm;Question 3 of 25;4.0 Points;Total assets of a firm are financed with liabilities and stockholders' equity.;True;False.;Question 4 of 25;4.0 Points;Gross profit is equal to;A.sales minus cost of goods sold.;B.sales minus (selling and administrative expenses).;C.sales minus (cost of goods sold and selling and administrative expenses).;D.sales minus (cost of goods sold and depreciation expense).;Question 5 of 25;4.0 Points;The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.;A. True;B. False;uestion 6 of 25;4.0 Points;Ratios are used to compare different firms in the same industry.;A. True;B. False;Question 7 of 25;4.0 Points;The Sarbanes-Oxley Act was passed in an effort to;A.protect small business from large corporations dominating the market.;B.ensure that partnerships divide profits among partners in a fair manner.;C.guarantee outside auditors can control corporate accounting practices.;D.control corrupt corporate behavior.;uestion 8 of 25;4.0 Points;Which of the following is not subtracted out in arriving at operating income?;A.interest expense;B.cost of goods sold;C.depreciation;D.selling and administrative expense;Question 9 of 25;4.0 Points;Which of the following is not a primary source of capital to the firm?;A.assets;B.common stock;C.preferred stock;D.bonds;Question 10 of 25;4.0 Points;A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?;A.$35 per share;B.$25 per share;C.$15 per share;D.Not enough information to tell;Question 11 of 25;4.0 Points;Debt utilization ratios are used to evaluate the firm's debt position with regard to its asset base and earning power.;A. True;B. False;uestion 12 of 25;4.0 Points;A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of;A.$60.00;B.$15.00;C.$6.67;D.the market assigns a stock price independent of EPS and the P/E ratio.;Question 13 of 25;4.0 Points;The P/E ratio is strongly related to the past performance of the firm.;A. True;B. False;Question 14 of 25;4.0 Points;Money markets would include which of the following securities?;A.common stock and corporate bonds.;B.treasury bills and commercial paper.;C.certificates of deposit and preferred stock.;D.all of these.;uestion 15 of 25;4.0 Points;Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.;A. True;B. False;Question 16 of 25;4.0 Points;Preferred stock is excluded from stockholders equity because it does not have full voting rights.;A. True;B. False;Question 17 of 25;4.0 Points;Sales minus cost of goods sold is equal to earnings before taxes.;A. True;B. False;Question 18 of 25;4.0 Points;Asset utilization ratios;A.relate balance sheet assets to income statement sales.;B.measure how much cash is available for reinvestment into current assets.;C.are most important to stockholders.;D.measures the firm's ability to generate a profit on sales.;Question 19 of 25;4.0 Points;The P/E ratio provides no indication of investors' expectations about the future of a company.;A. True;B. False;Question 20 of 25;4.0 Points;Asset utilization ratios relate balance sheet assets to income statement sales.;A. True;B. False;Question 21 of 25;4.0 Points;Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.;A. True;B. False;Question 22 of 25;4.0 Points;Which of the following is an outflow of cash?;A.profitable operations;B.the sale of equipment;C.the sale of the company?s common stock;D.the payment of cash dividends;uestion 23 of 25;4.0 Points;The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is;A.40%;B.12%;C.20%;D.25%;Question 24 of 25;4.0 Points;The income statement is the major device for measuring the profitability of a firm over a period of time.;A. True;B. False;Question 25 of 25;4.0 Points;Which of the following is an inflow of cash?;A.funds spent in normal business operations;B.the purchase of a new factory;C.the sale of the firm's bonds;D.the retirement of the firm's bonds

 

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