Solution to Quiz 3 Questions - Financial Management | FIN 3123, Quizzes of Finance

Download Solution to Quiz 3 Questions - Financial Management | FIN 3123 and more Quizzes Finance in PDF only on Docsity! Score: 20  out  of  20  points  (100%)  1. award: 1  out  of 1.00  point    2. award: 1  out  of 1.00  point     Relationships  determined  from  a  firm's  financial  information  and  used  for  comparison  purposes  are  known as: financial  ratios. identities. dimensional  analysis. scenario  analysis. solvency  analysis. Refer  to  section  3.3 The  formula  which  breaks  down  the  return  on  equity  into  three  component  parts  is  referred  to  as  which  one of  the  following? equity  equation profitability  determinant SIC  formula Du  Pont  identity equity  performance  formula Refer  to  section  3.4  3. award: 1  out  of 1.00  point    4. award: 1  out  of 1.00  point    5. award: 1  out  of 1.00  point   The  U.S.  government  coding  system  that  classifies  a  firm  by  the  nature  of  its  business  operations  is  known as  the: NASDAQ  100. Standard  &  Poor's  500. Standard  Industrial  Classification  code. Governmental  ID  code. Government  Engineered  Coding  System. Refer  to  section  3.5 Which  one  of  the  following  is  a  source  of  cash? increase  in  accounts  receivable decrease  in  notes  payable decrease  in  common  stock increase  in  accounts  payable increase  in  inventory Refer  to  section  3.1 On  the  Statement  of  Cash  Flows,  which  of  the  following  are  considered  financing  activities? I.  increase  in  long-­term  debt II.  decrease  in  accounts  payable III.  interest  paid IV.  dividends  paid I  and  IV  only III  and  IV  only II  and  III  only I,  III,  and  IV  only I,  II,  III,  and  IV Refer  to  section  3.1  12. award: 1  out  of 1.00  point    13. award: 1  out  of 1.00  point    14. award: 1  out  of 1.00  point   Ratios  that  measure  how  efficiently  a  firm  manages  its  assets  and  operations  to  generate  net  income  are referred  to  as  _____  ratios. asset  management long-­term  solvency short-­term  solvency profitability turnover Refer  to  section  3.3 If  a  firm  produces  a  twelve  percent  return  on  assets  and  also  a  twelve  percent  return  on  equity,  then  the firm: may  have  short-­term,  but  not  long-­term  debt. is  using  its  assets  as  efficiently  as  possible. has  no  net  working  capital. has  a  debt-­equity  ratio  of  1.0. has  an  equity  multiplier  of  1.0. Refer  to  section  3.3 Tobin's  Q  relates  the  market  value  of  a  firm's  assets  to  which  one  of  the  following? initial  cost  of  creating  the  firm current  book  value  of  the  firm average  asset  value  of  similar  firms average  market  value  of  similar  firms today's  cost  to  duplicate  those  assets Refer  to  section  3.3  15. award: 1  out  of 1.00  point    16. award: 1  out  of 1.00  point    17. award: 1  out  of 1.00  point   The  price-­sales  ratio  is  especially  useful  when  analyzing  firms  that  have  which  one  of  the  following? volatile  market  prices negative  earnings positive  PEG  ratios a  negative  Tobin's  Q increasing  sales Refer  to  section  3.3 Shareholders  probably  have  the  most  interest  in  which  one  of  the  following  sets  of  ratios? return  on  assets  and  profit  margin long-­term  debt  and  times  interest  earned price-­earnings  and  debt-­equity market-­to-­book  and  times  interest  earned return  on  equity  and  price-­earnings Refer  to  section  3.3 Which  one  of  the  following  accurately  describes  the  three  parts  of  the  Du  Pont  identity? operating  efficiency,  equity  multiplier,  and  profitability  ratio financial  leverage,  operating  efficiency,  and  profitability  ratio equity  multiplier,  profit  margin,  and  total  asset  turnover debt-­equity  ratio,  capital  intensity  ratio,  and  profit  margin return  on  assets,  profit  margin,  and  equity  multiplier Refer  to  section  3.4  18. award: 1  out  of 1.00  point    19. award: 1  out  of 1.00  point   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 I  only I  and  II  only II  and  IV  only II  and  III  only I,  II,  and  III  only Refer  to  section  3.4 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? I  and  III  only II  and  IV  only I,  II,  and  III  only II,  III  and  IV  only I,  II,  III,  and  IV Refer  to  section  3.4