FIN 701 W1 Module 2 Exam Questions with Complete Solutions
5 views 0 purchase
Course
FIN701
Institution
FIN701
The sources and uses of cash over a stated period of time are reflected on the: - Answer-statement of cash flows
A common-size income statement is an accounting that expresses all of a firm's expenses as a percentage of: - Answer-sales
On a common-size balance sheet all accounts for the curre...
FIN 701 W1 Module 2 Exam Questions
with Complete Solutions
The sources and uses of cash over a stated period of time are reflected on the: -
Answer-statement of cash flows
A common-size income statement is an accounting that expresses all of a firm's
expenses as a percentage of: - Answer-sales
On a common-size balance sheet all accounts for the current year are expressed as a
percentage of: - Answer-total assets for the current year
All of the following issues represent problems encountered when comparing the
financial statements of two separate entities except the issue of the companies: -
Answer-having the same fiscal year
An increase in which one of the following will increase a firm's quick ratio without
affecting its cash ratio: - Answer-accounts receivable
Ratios that measure a firm's liquidity are known as ____ ratios: - Answer-short-term
solvency
RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's
has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both
companies have similar operations. Based on this information, RJ's must be doing
which one of the following: - Answer-utilizing its total assets more efficiently than Sam's
Ratios that measure how efficiently a firm manages its assets and operations to
generate net income are referred to as ____ ratios. - Answer-profitability
Which one of these identifies the relationship between the return on the assets and the
return on equity? - Answer-DuPont identity
Which one of the following accurately describes the three parts of the DuPont identity: -
Answer-equity multiplier, profit margin, and total asset turnover
If a company produces a return in assets of 14 percent and also a return on equity of 14
percent, then the firm: - Answer-has a equity multiplier of 1.0 (DuPont identity)
An increase in which of the following must increase the return on equity, all else
constant: - Answer-total asset turnover and debt-equity ratio (DuPont identity)
, The DuPont identity can be used to help managers answer which of the following
questions related to a company's operations: - Answer-I. How many sales dollars are
being generated per cash dollar of assets
II. How many dollars of assets have been acquired per each dollar in shareholders'
equity
III. How much net profit is being generating per dollar sales
Which one of the following will decrease if a firm can decrease its operating costs, all
else constant: - Answer-price-earning ratio
The price-sales ratio especially useful when analyzing firms that have: - Answer-
negative earnings
Oil Creek Auto has sales of $3,340, net income of $247, net fixed assets of $2,600, and
current assets of $920. The firm has $430 in inventory. What is the common-size
statement value of inventory: - Answer-12.22 percent
Common-size inventory= $430/(2,600 + 920)
Common-size inventory= .1222, or 12.22%
Duke's Garage has cash of $68, accounts receivable of $142, accounts payable of
$235, and inventory of $318. What is the value of the quick ratio: - Answer-.89
Quick ratio= ($68 + 142)/$235
Quick ratio= .89
If a firm has a debt-equity of 1.0, then its total debit ratio must be which of the following:
- Answer-.5
SS Stores has total debt of $4,910 and a debt-equity ratio of 0.52. What is the value of
total assets: - Answer-14,352.31
Total equity= $4,910/.52
Total equity= $9,442.31
Total assets= $4,910 + 9,442.31
Total assets= $14,352.31
Corner Books has a debt-equity ratio of .57. What is the total debt ratio: - Answer-.36
Given the debt-equity ratio of .57, if total debt is $.57 then total equity is $1.00 and total
assets are $1.57.
Total debt ratio= $.57/$1.57
Total debt ratio= .36
The Up-Towner has sales of $913,400, costs of goods sold of $579,300, inventory of
$123,900, and accounts receivable of $78,900. How many days, on average, does it
take the firm to sell its inventory assuming that all sales are on credit: - Answer-78.07
Days' sales inventory= 365/($579,300/$123,900)
Days' sales in inventory= 78.07 days
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lectknancy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
