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Question;31. Dee's has a fixed asset turnover rate of 1.12 and;a total asset turnover rate of 0.91. Sam's has a fixed asset turnover rate of;1.15 and a total asset turnover rate of 0.88. Both companies have similar;operations. Based on this information, Dee's must be doing which one of the;following?;A. utilizing its fixed assets more efficiently than Sam's;B. utilizing its total assets more efficiently than Sam's;C. generating $1 in sales for every $1.12 in net fixed assets;D. generating $1.12 in net income for every $1 in net fixed assets;E. maintaining the same level of current assets as Sam's;32. Ratios that measure how efficiently a firm manages;its assets and operations to generate net income are referred to as;ratios.;A. asset management;B. long-term solvency;C. short-term solvency;D. profitability;E. turnover;33. If a firm produces a twelve percent return on;assets and also a twelve percent return on equity, then the firm;A. may have short-term, but not long-term debt.;B. is using its assets as efficiently as possible.;C. has no net working capital.;D. has a debt-equity ratio of 1.0.;E. has an equity multiplier of 1.0.;34. Which one of the following will decrease if a firm;can decrease its operating costs, all else constant?;A. return on equity;B. return on assets;C. profit margin;D. equity multiplier;E. price-earnings ratio;35. Al's has a price-earnings ratio of 18.5. Ben's;also has a price-earnings ratio of 18.5. Which one of the following statements;must be true if Al's has a higher PEG ratio than Ben's?;A. Al's has more net income than Ben's.;B. Ben's is increasing its earnings at a faster rate than the Al's.;C. Al's has a higher market value per share than does Ben's.;D. Ben's has a lower market-to-book ratio than Al's.;E. Al's has a higher net income than Ben's.;36. Tobin's Q relates the market value of a firm's;assets to which one of the following?;A. initial cost of creating the firm;B. current book value of the firm;C. average asset value of similar firms;D. average market value of similar firms;E. today's cost to duplicate those assets;37. The price-sales ratio is especially useful when;analyzing firms that have which one of the following?;A. volatile market prices;B. negative earnings;C. positive PEG ratios;D. a negative Tobin's Q;E. increasing sales;38. Shareholders probably have the most interest in;which one of the following sets of ratios?;A. return on assets and profit margin;B. long-term debt and times interest earned;C. price-earnings and debt-equity;D. market-to-book and times interest earned;E. return on equity and price-earnings;39. Which one of the following accurately describes;the three parts of the Du Pont identity?;A. operating efficiency, equity multiplier, and profitability ratio;B. financial leverage, operating efficiency, and profitability ratio;C. equity multiplier, profit margin, and total asset turnover;D. debt-equity ratio, capital intensity ratio, and profit margin;E. return on assets, profit margin, and equity multiplier;40. An increase in which of the following will increase;the return on equity, all else constant?;I. sales;II. net income;III. depreciation;IV. total equity;A. I only;B. I and II only;C. II and IV only;D. II and III only;E. I, II, and III only;41. Which of the following can be used to compute the;return on equity?;I. Profit margin? Return on assets;II. Return on assets? Equity multiplier;III. Net income/Total equity;IV. Return on assets? Total asset turnover;A. I and III only;B. II and III only;C. II and IV only;D. I, II, and III only;E. I, II, III, and IV;42. The Du Pont identity can be used to help managers;answer which of the following questions related to a firm's operations?;I. How many sales dollars has the firm generated per each dollar of assets?;II. How many dollars of assets has a firm acquired per each dollar in;shareholders' equity?;III. How much net profit is a firm generating per dollar of sales?;IV. Does the firm have the ability to meet its debt obligations in a timely;manner?;A. I and III only;B. II and IV only;C. I, II, and III only;D. II, III and IV only;E. I, II, III, and IV;43. 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?;A. equity multiplier;B. total asset turnover;C. profit margin;D. return on assets;E. return on equity;44. Which one of the following statements is;correct?;A. Book values should always be given precedence over market values.;B. Financial statements are frequently used as the basis for performance;evaluations.;C. Historical information provides no value to someone who is predicting;future performance.;D. Potential lenders place little value on financial statement information.;E. Reviewing financial information over time has very limited value.;45. It is easier to evaluate a firm using financial;statements when the firm;A. is a conglomerate.;B. has recently merged with its largest competitor.;C. uses the same accounting procedures as other firms in the industry.;D. has a different fiscal year than other firms in the industry.;E. tends to have many one-time events such as asset sales and property;acquisitions.;46. The most acceptable method of evaluating the financial;statements of a firm is to compare the firm's current;A. financial ratios to the firm's historical ratios.;B. financial statements to the financial statements of similar firms;operating in other;C. countries.;D. financial ratios to the average ratios of all firms located within the;same geographic area.;E. financial statements to those of larger firms in unrelated industries.;F. financial statements to the projections that were created based on;Tobin's Q.;47. Which of the following represent problems;encountered when comparing the financial statements of two separate entities?;I. Either one, or both, of the firms may be conglomerates and thus have;unrelated lines of business.;II. The operations of the two firms may vary geographically.;III. The firms may use differing accounting methods.;IV. The two firms may be seasonal in nature and have different fiscal year;ends.;A. I and II only;B. II and III only;C. I, III, and IV only;D. I, II, and III only;E. I, II, III, and IV;48. 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 2009?;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 $111;E. net source of cash of $135;49. 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?;A. $245 use of cash;B. $165 use of cash;C. $95 use of cash;D. $95 source of cash;E. $165 source of cash;50. A firm generated net income of $878. The;depreciation expense was $47 and dividends were paid in the amount of $25.;Accounts payables decreased by $13, accounts receivables increased by $22;inventory decreased by $14, and net fixed assets decreased by $8. There was no;interest expense. What was the net cash flow from operating activity?;A. $876;B. $902;C. $904;D. $922;E. $930;51. A firm has sales o


Paper#45091 | Written in 18-Jul-2015

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