Question 1

Which of the following properly links the factors affecting a firm's ability to generate cash with its need to use cash in financing?
$\begin{array}{lll}
& \underline {\text { Ability to generate cash}}&\underline {\text { Need to use cash}}\
a.   &\text { Profitability of goods and services sold }&   \text { Working capital requirements}\
b.   &\text { Sales of existing plant assets }&   \text { Plant capacity requirements}\
c. &  \text { Borrowing capacity} &   \text {  Debt service requirements}\
d.  & \text { Profitability of goods and services sold }&   \text { Debt service requirements}\
\end{array}$

Accepted Answer

The answer of Which of the following properly links the...

Question 2

One problem with debt ratios is that they provide no information about the ability of the firm to generate ________________________________________ to service debt.

Accepted Answer

cash flow ...

Question 3

Mobile Company
Mobile Company manufactures computer technology devices.Selected financial data for Mobile is presented below; use the information to answer the following questions:
   current Assets ‾ As of Dec. 31,2010 Dec. 31,2009 Cash and short-term investments $1,267,038$616,604 Accounts Receivable (net)  490,816665,828 Inventories 338,599487,505 Prepaid Expenses and other current assets 292,511‾\underlind291,915 Total Current Assets $2,388,964$2,061,852Current Liabilities  Short-term borrowings $25,190$38,108 Current portion of long-term debt 182,295210,090 Accounts payable 296,307334,247 Accrued liabilities 941,912743,999 Income taxes payable 203,049‾239,793‾ Total Current Liabilities 1.648753566237\begin{array}{lcc}\underline{	ext { current Assets }}& 	ext { As of Dec. } 31,2010 &	ext { Dec. } 31,2009\	ext { Cash and short-term investments } & \$ 1,267,038 & \$ 616,604 \	ext { Accounts Receivable (net)  } & 490,816 & 665,828 \	ext { Inventories } & 338,599 & 487,505 \	ext { Prepaid Expenses and other current assets } &\underline{ 292,511} & \underlind{291,915}\	ext { Total Current Assets }&\$ 2,388,964 & \$ 2,061,852\\	ext {Current Liabilities }\	ext { Short-term borrowings } & \$ 25,190 & \$ 38,108 \	ext { Current portion of long-term debt } & 182,295 & 210,090 \	ext { Accounts payable } & 296,307 & 334,247 \	ext { Accrued liabilities } & 941,912 & 743,999 \	ext { Income taxes payable } & \underline{203,049 }&\underline{ 239,793 }\	ext { Total Current Liabilities }&1.648753&566237\\end{array} current Assets ​ Cash and short-term investments  Accounts Receivable (net)   Inventories  Prepaid Expenses and other current assets  Total Current Assets Current Liabilities  Short-term borrowings  Current portion of long-term debt  Accounts payable  Accrued liabilities  Income taxes payable  Total Current Liabilities ​ As of Dec. 31,2010$1,267,038490,816338,599292,511​$2,388,964$25,190182,295296,307941,912203,049​1.648753​ Dec. 31,2009$616,604665,828487,505\underlind291,915$2,061,852$38,108210,090334,247743,999239,793​566237​

Selected Income Statement Data - for the year ending December 31, 2010: 	ext { Selected Income Statement Data - for the year ending December 31, 2010: } Selected Income Statement Data - for the year ending December 31, 2010:  
  Net Sales $4,885,340 Cost of Goods Sold 2,542,35 Operating Income 733,54 Net Income 230,10\begin{array}{l}\begin{array}{l}	ext { Net Sales } &\$ 4,885,340\	ext { Cost of Goods Sold }&2,542,35 \	ext { Operating Income } &733,54 \	ext { Net Income }&230,10\end{array}\\begin{array}{r}\end{array}\end{array} Net Sales  Cost of Goods Sold  Operating Income  Net Income ​$4,885,3402,542,35733,54230,10​​ 
 
  Selected Statement of Cash Flow Data - for the year ending December 31,2010:	ext { Selected Statement of Cash Flow Data - for the year ending December } 31,2010: Selected Statement of Cash Flow Data - for the year ending December 31,2010: 
  Cash Flows from Operations $1.156,08\begin{array}{l}\begin{array}{l}	ext { Cash Flows from Operations } &\$ 1.156,08\\end{array}\\begin{array}{r}\end{array}\end{array} Cash Flows from Operations ​$1.156,08​​ 
-Refer to the information for Mobile Company.Mobile's current ratio in 2010 was:

Accepted Answer

A)   1.07
B)   1.45
C)   1
D)   .69 E) C) and D)
F) None of the above

Question 4

The Johnson Company has a current ratio of 1.45.The company has just sold $600,000 worth of merchandise on credit.What will the current ratio be after the sales on credit?

Accepted Answer

A)   greater than 1.45
B)   1.45
C)   less than 1.45
D)   unable to determine without more informationE) A) and B)
F) A) and C)

Question 5

Given the following information,calculate for Year 2 the number of days of working capital financing the firm will need to obtain from other sources?
 $$\begin{array} { l c c c } 
& \text { Year 1 } & \text { Yerar } 2 \
\text { Accounts Receivable, net }  & 518 & 562\
\text { Accounts Payable } &203&192\
\text { Inventary } &535 & 564 \\
\text { Credit Sales } & 3,205 & 3,636\
\text { Cast af Gads Sald } & 2,037 & 2,294 \
\text { Selling and Adrin Estuense } & 1,081 & 1,131 \

\end{array}$$

Accepted Answer

The student will need to calculate the n...

Question 6

Changes in interest rates can typically affect firms in all of the following ways except:

Accepted Answer

A)   The value of investments in bonds or other investment securities with fixed interestRates.
B)   The value of liabilities with fixed interest rates.
C)   The returns a firm generates from pension fund investments.
D)   The cash-equivalent value of assets invested abroad.E) B) and C)
F) None of the above

Question 7

Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk,which of the following is not one of the factors?

Accepted Answer

A)   Investment factors
B)   Financing factors
C)   Operating factors
D)   Credit factorsE) B) and C)
F) B) and D)

Question 8

Working capital is defined as ______________________ minus _____________________.

Accepted Answer

current as...

Question 9

Below is selected information from Marker's 2012 financial statements:
   As of Dec.31, 2012 Dec. 31, 2011 Cash and short-term investments $958,245$745,800 Accounts Receivable (net)  125,850135,400 nventories 195,650175,840 Prepaid Expenses and other current assets 45,30030,860 Total CurrentAssets $1,325,045$1,087,900 Plant, Property and Equipment, net 1,478,3201,358,700 Intangible Assets 125,600120,400 Total Assets $2,928,965$2,567,000 Short-term borrowings $25,190$3,108 Current portion of long-term debt 45,00040,000 Accounts payable 285,400325,900 Accrued liabilities 916,722705,89 ncome taxes payable 125,400115,600 Total Current Liabilities $1,397,712$1,225,499 Long-term Debt 450,000430,000 Total Liabilities $1,847,712$1,655,499 Shareholders’ Equity $1,081,253$911,501 Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000\begin{array}{lrr}&\text { As of Dec.31, } 2012&\text { Dec. 31, } 2011\\text { Cash and short-term investments } & \$ 958,245 & \$ 745,800 \\text { Accounts Receivable (net)  } & 125,850 & 135,400 \\text { nventories } & 195,650 & 175,840 \\text { Prepaid Expenses and other current assets } & 45,300 & 30,860\{\text { Total CurrentAssets }} & \$ 1,325,045 & \$ 1,087,900 \\text { Plant, Property and Equipment, net } & 1,478,320 & 1,358,700 \\text { Intangible Assets } & 125,600 & 120,400 \\text { Total Assets }& \$ 2,928,965&\$ 2,567,000 \\ \\text { Short-term borrowings } & \$ 25,190 & \$ 3,108 \\text { Current portion of long-term debt } & 45,000 & 40,000 \\text { Accounts payable } & 285,400 & 325,900 \\text { Accrued liabilities } & 916,722 & 705,89 \\text { ncome taxes payable } & 125,400 & 115,600\\text { Total Current Liabilities } & \$ 1,397,712 & \$ 1,225,499 \\text { Long-term Debt } & 450,000 & 430,000 \\text { Total Liabilities } & \$ 1,847,712 & \$ 1,655,499 \\text { Shareholders&#x27; Equity } & \$ 1,081,253 & \$ 911,501\\text { Total Liabilities and Shareholders&#x27; Equity}&\$ 2,928,965 & \$ 2,567,000 \\end{array} Cash and short-term investments  Accounts Receivable (net)   nventories  Prepaid Expenses and other current assets  Total CurrentAssets  Plant, Property and Equipment, net  Intangible Assets  Total Assets  Short-term borrowings  Current portion of long-term debt  Accounts payable  Accrued liabilities  ncome taxes payable  Total Current Liabilities  Long-term Debt  Total Liabilities  Shareholders’ Equity  Total Liabilities and Shareholders’ Equity​ As of Dec.31, 2012$958,245125,850195,65045,300$1,325,0451,478,320125,600$2,928,965$25,19045,000285,400916,722125,400$1,397,712450,000$1,847,712$1,081,253$2,928,965​ Dec. 31, 2011$745,800135,400175,84030,860$1,087,9001,358,700120,400$2,567,000$3,10840,000325,900705,89115,600$1,225,499430,000$1,655,499$911,501$2,567,000​

Selected Income Statement Data - for the year ending December 31, 2012: \text { Selected Income Statement Data - for the year ending December 31, 2012: } Selected Income Statement Data - for the year ending December 31, 2012:  
  Net Sales  Cost of Goods Sold  Operating Income  Net Income $3,210,645(2,310,210) $900,435$324,850\begin{array}{l}\begin{array}{l}\text { Net Sales } \\text { Cost of Goods Sold } \\text { Operating Income }\\text { Net Income }\end{array}\begin{array}{r}\$ 3,210,645 \(2,310,210) \\$ 900,435\\$ 324,850\end{array}\end{array} Net Sales  Cost of Goods Sold  Operating Income  Net Income ​$3,210,645(2,310,210) $900,435$324,850​​

Selected Statement of Cash Flow Data - for the year ending December 31,2012 : \text { Selected Statement of Cash Flow Data - for the year ending December } 31,2012 \text { : } Selected Statement of Cash Flow Data - for the year ending December 31,2012 :  
 Cash Flows from Operations interest Expense Income Tax Expense$584,75042,400114,200\begin{array}{l}\begin{array}{lll}\text {Cash Flows from Operations }\\text {interest Expense }\\text {Income Tax Expense}\end{array}\begin{array}{lll}\$ 584,750 \42,400 \114,200\end{array}\end{array}Cash Flows from Operations interest Expense Income Tax Expense​$584,75042,400114,200​​ 
-Marker's 2012 Interest Coverage ratio is:

Accepted Answer

A)   7.66
B)   1.00
C)   11.35
D)   4.35 E) None of the above
F) All of the above

Question 10

The source of risk related to political unrest and exchange rate changes are _________________________.

Accepted Answer

The answer of The source of risk related to political...

Question 11

Which of the following ratios is not a measure of long-term solvency risk?

Accepted Answer

A)   Debt /Equity Ratio
B)   Interest Coverage Ratio
C)   Operating Cash Flows to Current Liabilities Ratio
D)   Liabilities to Assets RatioE) A) and C)
F) C) and D)

Question 12

All of the following are common international risks faced by companies except:

Accepted Answer

A)   asset expropriation
B)   exchange rate changes
C)   political unrest
D)   dependence on one or a few suppliersE) A) and C)
F) A) and B)

Question 13

A.What are the three measures that are used to analyze long-term solvency risk?
B.describe each measure briefly

Accepted Answer

Answer part A:
1)Debt ratios
2)Interest ...

Question 14

Below is selected information from Marker's 2012 financial statements:
   As of Dec.31, 2012 Dec. 31, 2011 Cash and short-term investments $958,245$745,800 Accounts Receivable (net)  125,850135,400 nventories 195,650175,840 Prepaid Expenses and other current assets 45,30030,860 Total CurrentAssets $1,325,045$1,087,900 Plant, Property and Equipment, net 1,478,3201,358,700 Intangible Assets 125,600120,400 Total Assets $2,928,965$2,567,000 Short-term borrowings $25,190$3,108 Current portion of long-term debt 45,00040,000 Accounts payable 285,400325,900 Accrued liabilities 916,722705,89 ncome taxes payable 125,400115,600 Total Current Liabilities $1,397,712$1,225,499 Long-term Debt 450,000430,000 Total Liabilities $1,847,712$1,655,499 Shareholders’ Equity $1,081,253$911,501 Total Liabilities and Shareholders’ Equity$2,928,965$2,567,000\begin{array}{lrr}&\text { As of Dec.31, } 2012&\text { Dec. 31, } 2011\\text { Cash and short-term investments } & \$ 958,245 & \$ 745,800 \\text { Accounts Receivable (net)  } & 125,850 & 135,400 \\text { nventories } & 195,650 & 175,840 \\text { Prepaid Expenses and other current assets } & 45,300 & 30,860\{\text { Total CurrentAssets }} & \$ 1,325,045 & \$ 1,087,900 \\text { Plant, Property and Equipment, net } & 1,478,320 & 1,358,700 \\text { Intangible Assets } & 125,600 & 120,400 \\text { Total Assets }& \$ 2,928,965&\$ 2,567,000 \\ \\text { Short-term borrowings } & \$ 25,190 & \$ 3,108 \\text { Current portion of long-term debt } & 45,000 & 40,000 \\text { Accounts payable } & 285,400 & 325,900 \\text { Accrued liabilities } & 916,722 & 705,89 \\text { ncome taxes payable } & 125,400 & 115,600\\text { Total Current Liabilities } & \$ 1,397,712 & \$ 1,225,499 \\text { Long-term Debt } & 450,000 & 430,000 \\text { Total Liabilities } & \$ 1,847,712 & \$ 1,655,499 \\text { Shareholders&#x27; Equity } & \$ 1,081,253 & \$ 911,501\\text { Total Liabilities and Shareholders&#x27; Equity}&\$ 2,928,965 & \$ 2,567,000 \\end{array} Cash and short-term investments  Accounts Receivable (net)   nventories  Prepaid Expenses and other current assets  Total CurrentAssets  Plant, Property and Equipment, net  Intangible Assets  Total Assets  Short-term borrowings  Current portion of long-term debt  Accounts payable  Accrued liabilities  ncome taxes payable  Total Current Liabilities  Long-term Debt  Total Liabilities  Shareholders’ Equity  Total Liabilities and Shareholders’ Equity​ As of Dec.31, 2012$958,245125,850195,65045,300$1,325,0451,478,320125,600$2,928,965$25,19045,000285,400916,722125,400$1,397,712450,000$1,847,712$1,081,253$2,928,965​ Dec. 31, 2011$745,800135,400175,84030,860$1,087,9001,358,700120,400$2,567,000$3,10840,000325,900705,89115,600$1,225,499430,000$1,655,499$911,501$2,567,000​

Selected Income Statement Data - for the year ending December 31, 2012: \text { Selected Income Statement Data - for the year ending December 31, 2012: } Selected Income Statement Data - for the year ending December 31, 2012:  
  Net Sales  Cost of Goods Sold  Operating Income  Net Income $3,210,645(2,310,210) $900,435$324,850\begin{array}{l}\begin{array}{l}\text { Net Sales } \\text { Cost of Goods Sold } \\text { Operating Income }\\text { Net Income }\end{array}\begin{array}{r}\$ 3,210,645 \(2,310,210) \\$ 900,435\\$ 324,850\end{array}\end{array} Net Sales  Cost of Goods Sold  Operating Income  Net Income ​$3,210,645(2,310,210) $900,435$324,850​​

Selected Statement of Cash Flow Data - for the year ending December 31,2012 : \text { Selected Statement of Cash Flow Data - for the year ending December } 31,2012 \text { : } Selected Statement of Cash Flow Data - for the year ending December 31,2012 :  
 Cash Flows from Operations interest Expense Income Tax Expense$584,75042,400114,200\begin{array}{l}\begin{array}{lll}\text {Cash Flows from Operations }\\text {interest Expense }\\text {Income Tax Expense}\end{array}\begin{array}{lll}\$ 584,750 \42,400 \114,200\end{array}\end{array}Cash Flows from Operations interest Expense Income Tax Expense​$584,75042,400114,200​​ 
-Marker's 2012 Long-term Debt to Long-Term Capital ratio is:

Accepted Answer

A)   31.4%
B)   29.4%
C)   34.0%
D)   25.4% E) None of the above
F) C) and D)

Question 15

On January 1,2012,Deputron Company's beginning inventory was $600,000.During 2012,the company purchased $2,600,000 of additional inventory,and on December 31,2012 Creek's ending inventory was $565,000.
Required:
What was Deputron's inventory turnover for 2012?

Accepted Answer

4.5 times.
Calculations: Cost of goods s...

Question 16

The beta coefficient measures the ____________________ of a firm's returns with those of all shares traded in the market (in excess of the risk-free interest rate).

Accepted Answer

The answer of The beta coefficient measures the ____________________ of...

Question 17

The current ratio is one of the measures of the __________ of the firm.

Accepted Answer

The answer of The current ratio is one of the...

Question 18

_________________________ concerns a firm's ability to make interest and principal payments on borrowings as they become due.

Accepted Answer

The answer of _________________________ concerns a firm's ability to make...

Question 19

Bragdon Company is consistently profitable.Its normal financial statement relationships are as follows:
 $$\begin{array} { | l | l | } 
\hline \text { Current ratid } & 3.5 : 1 \
\hline \text { Inventary tundver } & 4.5 \text { tines } \
\hline \text { Liabilities to as5ets ratid } & 0.8 : 1 \
\hline
\end{array}$$ 
Required: Determine whether each transaction or event that follows increased,decreased or had no effect on each ratio.
1.Bragdon declared but did not pay a cash dividend.
2.Customers returned invoiced goods for which they had not paid.
3.Accounts payable were paid at year-end.
4.Bragdon recorded both a receivable from an insurance company and a loss on a building due to fire damage.
5.Early in the year,Bragdon increased the selling price of one of its products because customer demand far exceeded production capacity.The number of units sold this year was the same as last year.

Accepted Answer

1.Bragdon declared but did not pay a cas...

Question 20

When a company wants to calculate the current ratio they would divide the current assets by the ___________

Accepted Answer

The answer of When a company wants to calculate the...

Exam 5: Risk Analysis

On January 1,2012,Deputron Company's beginning inventory was $600,000.During 2012,the company purchased $2,600,000 of additional inventory,and on December 31,2012 Creek's ending inventory was $565,000. Required: What was Deputron's inventory turnover for 2012?

Correct Answer
verified
4.5 times.
Calculations: Cost of goods s...
View Answer

Correct Answer
verified
1.Bragdon declared but did not pay a cas...
View Answer

When a company wants to calculate the current ratio they would divide the current assets by the ___________

Correct Answer
verified

Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk,which of the following is not one of the factors?

Correct Answer
verified

_________________________ concerns a firm's ability to make interest and principal payments on borrowings as they become due.

Correct Answer
verified

Changes in interest rates can typically affect firms in all of the following ways except:

Correct Answer
verified

Correct Answer
verified
The student will need to calculate the n...
View Answer

Which of the following ratios is not a measure of long-term solvency risk?

Correct Answer
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The Johnson Company has a current ratio of 1.45.The company has just sold $600,000 worth of merchandise on credit.What will the current ratio be after the sales on credit?

Correct Answer
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Correct Answer
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Correct Answer
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One problem with debt ratios is that they provide no information about the ability of the firm to generate ________________________________________ to service debt.

Correct Answer
verified
cash flow ...
View Answer

A.What are the three measures that are used to analyze long-term solvency risk? B.describe each measure briefly

Correct Answer
verified
Answer part A:
1)Debt ratios
2)Interest ...
View Answer

The source of risk related to political unrest and exchange rate changes are _________________________.

Correct Answer
verified

The current ratio is one of the measures of the __________ of the firm.

Correct Answer
verified

Correct Answer
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The beta coefficient measures the ____________________ of a firm's returns with those of all shares traded in the market (in excess of the risk-free interest rate).

Correct Answer
verified

All of the following are common international risks faced by companies except:

Correct Answer
verified

Correct Answer
verified

Working capital is defined as __ minus _.

Correct Answer
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current as...
View Answer

Exam 5: Risk Analysis

On January 1,2012,Deputron Company's beginning inventory was $600,000.During 2012,the company purchased $2,600,000 of additional inventory,and on December 31,2012 Creek's ending inventory was $565,000. Required: What was Deputron's inventory turnover for 2012?

Correct Answerverified4.5 times.Calculations: Cost of goods s...View AnswerShow Answer

Correct Answerverified1.Bragdon declared but did not pay a cas...View AnswerShow Answer

When a company wants to calculate the current ratio they would divide the current assets by the ___________

Correct AnswerverifiedShow Answer

Bankruptcy prediction research has identified three broad factors influencing long-term solvency risk,which of the following is not one of the factors?

Correct AnswerverifiedShow Answer

_________________________ concerns a firm's ability to make interest and principal payments on borrowings as they become due.

Correct AnswerverifiedShow Answer

Changes in interest rates can typically affect firms in all of the following ways except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe student will need to calculate the n...View AnswerShow Answer

Which of the following ratios is not a measure of long-term solvency risk?

Correct AnswerverifiedShow Answer

The Johnson Company has a current ratio of 1.45.The company has just sold $600,000 worth of merchandise on credit.What will the current ratio be after the sales on credit?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One problem with debt ratios is that they provide no information about the ability of the firm to generate ________________________________________ to service debt.

Correct Answerverifiedcash flow ...View AnswerShow Answer

A.What are the three measures that are used to analyze long-term solvency risk? B.describe each measure briefly

Correct AnswerverifiedAnswer part A:1)Debt ratios2)Interest ...View AnswerShow Answer

The source of risk related to political unrest and exchange rate changes are _________________________.

Correct AnswerverifiedShow Answer

The current ratio is one of the measures of the __________ of the firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The beta coefficient measures the ____________________ of a firm's returns with those of all shares traded in the market (in excess of the risk-free interest rate).

Correct AnswerverifiedShow Answer

All of the following are common international risks faced by companies except:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Working capital is defined as ______________________ minus _____________________.

Correct Answerverifiedcurrent as...View AnswerShow Answer

Correct Answer
verified
4.5 times.
Calculations: Cost of goods s...
View Answer

Correct Answer
verified
1.Bragdon declared but did not pay a cas...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The student will need to calculate the n...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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cash flow ...
View Answer

Correct Answer
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Answer part A:
1)Debt ratios
2)Interest ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Working capital is defined as __ minus _.

Correct Answer
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current as...
View Answer