Managerial Finance Test 1 (Ch. 1-5)

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0 [{"id":585993,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:43:38","updated_at":"2018-10-04 14:43:38","questionName":"A decline in a firm's inventory turnover ratio suggests that it is improving both its inventory management and its liquidity position, i.e., that it is becoming more liquid.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":586016,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 15:07:41","updated_at":"2018-10-04 15:07:41","questionName":"If a bank compounds savings accounts quarterly, the nominal rate will exceed the effective annual rate.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":586003,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:49:32","updated_at":"2018-10-04 14:49:32","questionName":"Song Corp's stock price at the end of last year was $23.50 and its earnings per share for the year were $1.30. What was its P\/E ratio?","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":586001,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:47:20","updated_at":"2018-10-04 14:47:20","questionName":"Ajax Corp's sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times-interest-earned (TIE) ratio?","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585990,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:42:27","updated_at":"2018-10-04 14:42:27","questionName":"If a firm sold some inventory on credit, its current ratio would probably not change much, but its quick ratio would increase.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585992,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:42:52","updated_at":"2018-10-04 14:42:52","questionName":"The inventory turnover ratio and days sales outstanding (DSO) are two ratios that are used to assess how effectively a firm is managing its current assets.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585999,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:45:42","updated_at":"2018-10-04 14:45:42","questionName":"It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only if all the firms being compared have the same proportion of fixed assets to total assets.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585995,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:44:16","updated_at":"2018-10-04 14:44:16","questionName":"The \"apparent,\" but not necessarily the \"true,\" financial position of a company whose sales are seasonal can change dramatically during a given year, depending on the time of year when the financial statements are constructed.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585998,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:45:07","updated_at":"2018-10-04 14:45:07","questionName":"The inventory turnover and current ratio are related. The combination of a high current ratio and a low inventory turnover ratio, relative to industry norms, suggests that the firm has an above-average inventory level and\/or that part of the inventory is obsolete or damaged.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585988,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:41:32","updated_at":"2018-10-04 14:41:32","questionName":"The current and quick ratios both help us measure a firm's liquidity. The current ratio measures the relationship of the firm's current assets to its current liabilities, while the quick ratio measures the firm's ability to pay off short-term obligations without relying on the sale of inventories.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":586009,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:59:47","updated_at":"2018-10-04 14:59:47","questionName":"The balance sheet and income statement shown below are for Koski Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.\r\n\r\nBalance Sheet (Millions of $)\t \r\nAssets\t2014\r\nCash and securities:\t$ 2,500\r\nAccounts receivable:\t11,500\r\nInventories:\t 16,000\r\nTotal current assets:\t$30,000\r\nNet plant and equipment:\t$20,000\r\nTotal assets:\t$50,000\r\nLiabilities and Equity:\t \r\nAccounts payable:\t$ 9,500\r\nAccruals:\t5,500\r\nNotes payable:\t 7,000\r\nTotal current liabilities: $22,000\r\nLong-term bonds:\t$15,000\r\nTotal liabilities:\t$37,000\r\nCommon stock:\t$ 2,000\r\nRetained earnings:\t 11,000\r\nTotal common equity:\t$13,000\r\nTotal liabilities and equity:\t$50,000\r\n \t \r\nIncome Statement (Millions of $)\t2014\r\nNet sales:\t$87,500\r\nOperating costs except depreciation:\t81,813\r\nDepreciation:\t 1,531\r\nEarnings before interest and taxes (EBIT):\t$ 4,156\r\nLess interest:\t 1,375\r\nEarnings before taxes (EBT):\t$ 2,781\r\nTaxes:\t 973\r\nNet income:\t$ 1,808\r\n \t \r\nOther data:\t \r\nShares outstanding (millions):\t500.00\r\nCommon dividends\t$632.73\r\nInt rate on notes payable & L-T bonds::\t6.25%\r\nFederal plus state income tax rate:\t35%\r\nYear-end stock price: $43.39\r\n\r\nWhat is the firm's days sales outstanding? Assume a 365-day year for this calculation.\r\n\r\n","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585997,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:44:41","updated_at":"2018-10-04 14:44:41","questionName":"Significant variations in accounting methods among firms make meaningful ratio comparisons between firms more difficult than if all firms used the same or similar accounting methods.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":586002,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:48:26","updated_at":"2018-10-04 14:48:26","questionName":"Your sister is thinking about starting a new business. The company would require $375,000 of assets, and it would be financed entirely with common stock. She will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business?","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":586015,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 15:07:17","updated_at":"2018-10-04 15:07:17","questionName":"If the discount (or interest) rate is positive, the present value of an expected series of payments will always exceed the future value of the same series.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null},{"id":585994,"quiz_id":"27908","answer_id":null,"answerType_id":"0","created_at":"2018-10-04 14:43:56","updated_at":"2018-10-04 14:43:56","questionName":"Debt management ratios show the extent to which a firm's managers are attempting to magnify returns on owners' capital through the use of financial leverage.","questionTimeSeconds":"0","questionTimeMinutes":"20","questionImagePath":null,"position":null,"explanation":"","question_score_id":null,"lang":"","questionAudioPath":null}]
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A decline in a firm's inventory turnover ratio suggests that it is improving both its inventory management and its liquidity position, i.e., that it is becoming more liquid.

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