Question 10. 10. Which of the following items is NOT included in current assets? (Points : 2)

1. Rappaport Corp.’s sales last year were $320,000, and its net income after taxes was $23,000. What was its profit margin on sales? (Points : 2)       6.49%
6.83%
7.19%
7.55%

Question 2. 2. Arshadi Corp.’s sales last year were $52,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)? (Points : 2)

2.03
2.13
2.25
2.36

 

Question 3. 3. Branch Corp.’s total assets at the end of last year were $315,000 and its net income after taxes was $22,750. What was its return on total assets? (Points : 2)

7.22%
7.58%
7.96%
8.36%

 

Question 4. 4. Nikko Corp.’s total common equity at the end of last year was $305,000 and its net income after taxes was $60,000. What was its ROE? (Points : 2)

16.87%
17.75%
18.69%
19.67%

 

Question 5. 5. Orono 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? (Points : 2)

4.72
4.97
5.23
5.80

 

Question 6. 6. Which of the following statements is CORRECT? (Points : 2)

The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders’ equity.
The balance sheet gives us a picture of the firm’s financial position at a point in time.
The income statement gives us a picture of the firm’s financial position at a point in time.
The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits.

 

Question 7. 7. Which of the following statements is CORRECT? (Points : 2)

The more depreciation a firm reports, the higher its tax bill, other things held constant.
People sometimes talk about the firm’s net cash flow, which is shown as the lowest entry on the income statement; hence it is often called “the bottom line.”
Depreciation reduces a firm’s cash balance, so an increase in depreciation would normally lead to a reduction in the firm’s net cash flow.
Net cash flow (NCF) is often defined as follows:
Net Cash Flow = Net Income + Depreciation and Amortization Charges.

 

Question 8. 8. Determining whether a firm’s financial position is improving or deteriorating requires analyzing more than the ratios for a given year. Trend analysis is one method of measuring changes in a firm’s performance over time. (Points : 2)

True
False

 

Question 9. 9. Which of the following statements is CORRECT?                  (Points : 2)

A reduction in inventories held would have no effect on the current ratio.
An increase in inventories would have no effect on the current ratio.
If a firm increases its sales while holding its inventories constant, then, other things held constant, its inventory turnover ratio will increase.
A reduction in the inventory turnover ratio will generally lead to an increase in the ROE.

 

Question 10. 10. Which of the following items is NOT included in current assets? (Points : 2)

Accounts receivable.
Inventory.
Bonds.
Cash.

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