FIN Chapter 3

Activities of a firm which require the spending of cash are known as:

The sources and uses of cash over a stated period of time are reflected on the:

A common-size income statement is an accounting statement that expresses all of a firm's expenses as percentage of:

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time?

Relationships determined from a firm's financial information and used for comparison purposes are known as:

The formula which breaks down the return on equity into three component parts is referred to as which one of the following?

The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:

Which one of the following is a source of cash?

Which one of the following is a use of cash?

Which one of the following is a source of cash?

Which one of the following is a source of cash?

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

On the Statement of Cash Flows, which of the following are considered operating activities? I. costs of goods sold II. decrease in accounts payable III. interest paid IV. dividends paid

According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.

According to the Statement of Cash Flows, an increase in interest expense will _____ the cash flow from _____ activities.

On a common-size balance sheet all accounts are expressed as a percentage of:

On a common-base year financial statement, accounts receivables will be expressed relative to which one of the following?

A firm uses 2011 as the base year for its financial statements. The common-size, base-year statement for 2012 has an inventory value of 1.08. This is interpreted to mean that the 2012 inventory is equal to 108 percent of which one of the following?

Which of the following ratios are measures of a firm's liquidity? I. cash coverage ratio II. interval measure III. debt-equity ratio IV. quick ratio

An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values.

An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?

A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?

A firm has an interval measure of 48. This means that the firm has sufficient liquid assets to do which one of the following?

Ratios that measure a firm's financial leverage are known as _____ ratios.

Which one of the following statements is correct?

If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?

The cash coverage ratio directly measures the ability of a firm's revenues to meet which one of its following obligations?

Jasper United had sales of $21,000 in 2011 and $24,000 in 2012. The firm's current accounts remained constant. Given this information, which one of the following statements must be true?

The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level. Assume that both the cost per unit and the selling price per unit also remained constant. This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?

Dee's has a fixed asset turnover rate of 1.12 and a total asset turnover rate of 0.91. Sam's has a fixed asset turnover rate of 1.15 and a total asset turnover rate of 0.88. Both companies have similar operations. Based on this information, Dee's must be doing which one of the following?

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

If a firm produces a twelve percent return on assets and also a twelve percent return on equity, then the firm:

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

Al's has a price-earnings ratio of 18.5. Ben's also has a price-earnings ratio of 18.5. Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?

Tobin's Q relates the market value of a firm's assets to which one of the following?

The price-sales ratio is especially useful when analyzing firms that have which one of the following?

Shareholders probably have the most interest in which one of the following sets of ratios?

Which one of the following accurately describes the three parts of the Du Pont identity?

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

Which of the following can be used to compute the return on equity? I. Profit margin × Return on assets II. Return on assets × Equity multiplier III. Net income/Total equity IV. Return on assets × Total asset turnover

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?

A firm currently has $600 in debt for every $1,000 in equity. Assume the firm uses some of its cash to decrease its debt while maintaining its current equity and net income. Which one of the following will decrease as a result of this action?

Which one of the following statements is correct?

It is easier to evaluate a firm using financial statements when the firm:

The most acceptable method of evaluating the financial statements of a firm is to compare the firm's current:

Which of the following represent problems encountered when comparing the financial statements of two separate entities? I. Either one, or both, of the firms may be conglomerates and thus have unrelated lines of business. II. The operations of the two firms may vary geographically. III. The firms may use differing accounting methods. IV. The two firms may be seasonal in nature and have different fiscal year ends.