42)
The statement of cash flows helps managers answer which of the following questions?
7 Points
- Will we have to borrow all the needed cash?
- If borrowing is necessary, can the new debt be serviced?
- Can cash be raised by issuing additional capital?
- All of the answers are correct.
43)
When a current financial statement amount is expressed as a percentage of a prior-period amount, it is referred to as:
7 Points
- common size analysis.
- ratio analysis.
- vertical analysis.
- horizontal analysis.
44)
Which of the following is an advantage of financial statement analysis using percentages?
7 Points
- Percentages are easy to calculate.
- Percentages eliminate the effect of size.
- Percentages are more accurate than dollar amounts.
- Percentages provide more information.
45)
A company has the following account balances for the last quarter of the year:
Cash: $65,000
Accounts Receivable: 120,000
Marketable securities: 40,000
Inventory: 150,000
Current liabilities: 210,000
The quick ratio (rounded to two decimals) for this company is:
7 Points
- 1.07
- 1.48
- 1.59
- 1.78
46)
Accounts receivable turnover indicates:
7 Points
- the amount of accounts receivable still outstanding.
- the company’s reliance on accounts receivable for its sales.
- the speed of collection of accounts receivable.
- the company’s terms for the collection of accounts receivable.
47)
Leverage ratios are important to creditors because these ratios:
7 Points
- measure a firm’s ability to meet long-term debt.
- measure a firm’s profitability.
- measure a firm’s ability to meet short-term debt.
- measure a firm’s ability to meet short- and long-term debt.
48)
A company has $685,000 in income from continuing operations and $650,000 in income before tax for the current period. Interest expense is $45,000. What is the times-interest-earned ratio (round to two decimals)?
7 Points
- 15.22
- 15.44
- 16.22
- 14.44
49)
The dividend payout ratio indicates:
7 Points
- the proportion of earnings that the company pays in dividends.
- the share price.
- the company’s earnings for every share outstanding.
- each stockholder’s share of the company’s earnings.
50)
The times-interest-earned ratio is a good indication of:
7 Points
- the company’s ability to refinance its debt.
- the company’s outstanding debt.
- the company’s ability to service its debt.
- the company’s overall debt-to-equity ratio.
