Question 1

Last year Central Chemicals had sales of $205,000,assets of $127,500,a profit margin of 5.3%,and an equity multiplier of 1.2.The CFO believes that the company could reduce its assets by $21,000 without affecting either sales or costs.Had it reduced its assets in this amount,and had the debt-to-assets ratio,sales,and costs remained constant,by how much would the ROE have changed?

Accepted Answer

A)   1.81%
B)   2.02%
C)   2.22%
D)   2.44%
E)   2.68%

Question 2

Considered alone,which of the following would increase a company's current ratio?

Accepted Answer

A)   An increase in accounts payable.
B)   An increase in net fixed assets.
C)   An increase in accrued liabilities.
D)   An increase in notes payable.
E)   An increase in accounts receivable.

Question 3

Northwest Lumber had a profit margin of 5.25%,a total assets turnover of 1.5,and an equity multiplier of 1.8.What was the firm's ROE?

Accepted Answer

A)   12.79%
B)   13.47%
C)   14.18%
D)   14.88%
E)   15.63%

Question 4

The current ratio and inventory turnover ratios both help us measure the firm's liquidity.The current ratio measures the relationship of a firm's current assets to its current liabilities,while the inventory turnover ratio gives us an indication of how long it takes the firm to convert its inventory into cash.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is CORRECT?

Accepted Answer

A)   An increase in a firm's debt ratio,with no changes in its sales or operating costs,could be expected to lower the profit margin.
B)   The ratio of long-term debt to total capital is more likely to experience seasonal fluctuations than is either the DSO or the inventory turnover ratio.
C)   If two firms have the same ROA,the firm with the most debt can be expected to have the lower ROE.
D)   An increase in the DSO,other things held constant,could be expected to increase the total assets turnover ratio.
E)   An increase in the DSO,other things held constant,could be expected to increase the ROE.

Exam 3: Analysis of Financial Statements

Which of the following statements is CORRECT?

Correct Answer
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Correct Answer
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Considered alone,which of the following would increase a company's current ratio?

Correct Answer
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Correct Answer
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Northwest Lumber had a profit margin of 5.25%,a total assets turnover of 1.5,and an equity multiplier of 1.8.What was the firm's ROE?

Correct Answer
verified

Exam 3: Analysis of Financial Statements

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Considered alone,which of the following would increase a company's current ratio?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Northwest Lumber had a profit margin of 5.25%,a total assets turnover of 1.5,and an equity multiplier of 1.8.What was the firm's ROE?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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