Question 1

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

Accepted Answer

The answer of Earnings before interest and taxes is $74,300....

Question 2

What is the cash coverage ratio for 2015?

Accepted Answer

Cash Coverage Ratio = (EBIT + Depreciation) / Interest Expense
For 2015, EBIT = 60,000, Depreciation = 10,000 and Interest Expense = 5,000
Cash Coverage Ratio = (60,000 + 10,000) / 5,000 = 14
Therefore, the Cash Coverage Ratio is 9.7 (rounded off to one decimal point)

Question 3

Use the following statement of ﬁnancial position and statement of comprehensive income    What is the days' sales in inventory for Bluebird? (Use average inventory.)

Accepted Answer

The answer of Use the following statement of ﬁnancial position...

Question 4

Which of the following are considered a use of cash?

Accepted Answer

When accounts payable decrease, it means a company is paying off its suppliers or creditors, which is a use of cash.

Question 5

Calculate gross proﬁt ratio given the following information: accounts receivable = $3,500; inventory = $4,500; receivable turnover = 80 times; inventory turnover = 18 times.

Accepted Answer

The answer of Calculate gross proﬁt ratio given the following...

Question 6

Tron, Inc. of Guelph has a times interest earned ratio of 4.1. Based on this ratio, a creditor knows that Tron's EBIT must decline by more than __________ before Tron will be unable to cover its interest
Expense.

Accepted Answer

The answer of Tron, Inc. of Guelph has a times...

Question 7

What is the cash coverage ratio?

Accepted Answer

The answer of   What is the cash coverage...

Question 8

Use the following statement of ﬁnancial position and statement of comprehensive income    Accounts payable for 2015 will have a value of _____ % on the ﬁrm's common-size ﬁnancial statement.

Accepted Answer

The answer of Use the following statement of ﬁnancial position...

Question 9

Calculate the times interest earned ratio given the following information: depreciation expense = $6,000; EBIT = $90,000; cash coverage ratio = 8 times.

Accepted Answer

The answer of Calculate the times interest earned ratio given...

Question 10

Calculate the return on equity given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.

Accepted Answer

Return on Equity (ROE) = Net Income / Total Equity
Since earnings per share = $2.00 and there are 250,000 common shares outstanding:
Net Income = Earnings per share * Common shares outstanding = 2 * 250,000 = $500,000
ROE = 500,000 / 800,000 = 0.625 or 62.5%

Question 11

Margo's Dress Shoppe had the following values as of the end of last year and the end of this year. Which of the following are sources of cash for the year?

Accepted Answer

The answer of Margo's Dress Shoppe had the following values...

Question 12

Which one of the following will increase the return on equity as computed using the Du Pont identity given that all else is held constant?

Accepted Answer

A decrease in total equity increases the return on equity (ROE) by increasing the equity multiplier component of the Du Pont identity, assuming net income remains constant. This is because ROE is calculated as net income divided by shareholder's equity; thus, a decrease in equity, with constant net income, results in a higher ROE.

Question 13

Big Foot Wholesalers has sales of $1,387,400, costs of goods sold of $891,400, inventory of $188,936, and accounts receivable of $94,800. How many days, on average, does it take the ﬁrm to
Sell its inventory assuming that all sales are on credit?

Accepted Answer

First, we need to calculate the inventory turnover ratio using the formula:

Inventory Turnover Ratio = Cost of goods sold / Average Inventory

Average Inventory = (Beginning inventory + Ending inventory) / 2

We don't have the beginning inventory, so we'll assume it's the same as the ending inventory. Therefore,

Average Inventory = ($188,936 + $188,936) / 2 = $188,936

Inventory Turnover Ratio = $891,400 / $188,936 = 4.72

Next, we can use the inventory turnover ratio to calculate days in inventory using the formula:

Days in Inventory = 365 days / Inventory Turnover Ratio

Days in Inventory = 365 days / 4.72 = 77.4 days

Therefore, it takes the firm on average 77.4 days to sell its inventory assuming all sales are on credit. Choice C is the best answer.

Question 14

Gateway Lodging has annual sales of $1.22 million, total debt of $380,000, total equity of $750,000, and a proﬁt margin of 7.45 %. What is the return on assets?

Accepted Answer

The answer of Gateway Lodging has annual sales of $1.22...

Question 15

Which of the following statements is true?

Accepted Answer

The statement "Since inventory is not as liquid as the other current assets it is excluded in calculation of the quick ratio" is true. The quick ratio (also known as the acid-test ratio) only includes the most liquid current assets such as cash, marketable securities, and accounts receivable, and excludes inventory. This is because inventory may take longer to convert into cash and may lose value over time.

Question 16

Calculate cash coverage ratio given the following information: depreciation expense = $6,000; EBIT = $12,000; times interest earned = 4 times.

Accepted Answer

The answer of Calculate cash coverage ratio given the following...

Question 17

Nu Plastics has accounts receivable of $6,400, inventory of $11,600, cash of $1,300, accounts payable of $8,800, sales of $117,600, and cost of goods sold of $89,300. What is the net working
Capital turnover rate?

Accepted Answer

The answer of Nu Plastics has accounts receivable of $6,400,...

Question 18

Stephen's Auto Body Shop (Oshawa) has a debt-equity ratio of .6, a total asset turnover of 1.43, and a proﬁt margin of 5 %. The ﬁrm has a return on assets of _____ % and a return on equity of _____
%)

Accepted Answer

Return on assets (ROA) = Profit margin × Total asset turnover
ROA = 0.05 × 1.43
ROA = 0.0715 or 7.15%

Return on equity (ROE) = ROA × Debt-equity ratio + (Debt-equity ratio × (1 - Profit margin))
ROE = 0.0715 × 0.6 + (0.6 × (1 - 0.05))
ROE = 0.429 or 11.44%

Therefore, the answer is B.

Question 19

Which of the following are considered a source of cash?

Accepted Answer

An increase in accounts payable means that a company is paying off its suppliers or creditors at a slower rate than it is purchasing goods or services, effectively using the suppliers' money to finance its operations in the short term. This delay in payment represents a source of cash because the company retains cash longer before it has to pay out to suppliers.

Question 20

Glen Acre Wines has sales of $682,100, total debt of $285,000, total equity of $323,900, and a proﬁt margin of 8 %. What is the return on assets?

Accepted Answer

Return on assets (ROA) is calculated as (Net Income / Total Assets). First, calculate Net Income using the profit margin: Net Income = Sales * Profit Margin = $682,100 * 0.08 = $54,568. Then, calculate Total Assets: Total Assets = Total Debt + Total Equity = $285,000 + $323,900 = $608,900. Finally, ROA = $54,568 / $608,900 = 0.0896 or 8.96%.

Quiz 3: Working With Financial Statements

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

What is the cash coverage ratio for 2015?

Use the following statement of ﬁnancial position and statement of comprehensive income What is the days' sales in inventory for Bluebird? (Use average inventory.)

Which of the following are considered a use of cash?

Calculate gross proﬁt ratio given the following information: accounts receivable = $3,500; inventory = $4,500; receivable turnover = 80 times; inventory turnover = 18 times.

Tron, Inc. of Guelph has a times interest earned ratio of 4.1. Based on this ratio, a creditor knows that Tron's EBIT must decline by more than __________ before Tron will be unable to cover its interest Expense.

What is the cash coverage ratio?

Use the following statement of ﬁnancial position and statement of comprehensive income Accounts payable for 2015 will have a value of _____ % on the ﬁrm's common-size ﬁnancial statement.

Calculate the times interest earned ratio given the following information: depreciation expense = $6,000; EBIT = $90,000; cash coverage ratio = 8 times.

Calculate the return on equity given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.

Margo's Dress Shoppe had the following values as of the end of last year and the end of this year. Which of the following are sources of cash for the year?

Which one of the following will increase the return on equity as computed using the Du Pont identity given that all else is held constant?

Big Foot Wholesalers has sales of $1,387,400, costs of goods sold of $891,400, inventory of $188,936, and accounts receivable of $94,800. How many days, on average, does it take the ﬁrm to Sell its inventory assuming that all sales are on credit?

Gateway Lodging has annual sales of $1.22 million, total debt of $380,000, total equity of $750,000, and a proﬁt margin of 7.45 %. What is the return on assets?

Which of the following statements is true?

Calculate cash coverage ratio given the following information: depreciation expense = $6,000; EBIT = $12,000; times interest earned = 4 times.

Nu Plastics has accounts receivable of $6,400, inventory of $11,600, cash of $1,300, accounts payable of $8,800, sales of $117,600, and cost of goods sold of $89,300. What is the net working Capital turnover rate?

Stephen's Auto Body Shop (Oshawa) has a debt-equity ratio of .6, a total asset turnover of 1.43, and a proﬁt margin of 5 %. The ﬁrm has a return on assets of _ % and a return on equity of _ %)

Which of the following are considered a source of cash?

Glen Acre Wines has sales of $682,100, total debt of $285,000, total equity of $323,900, and a proﬁt margin of 8 %. What is the return on assets?

Quiz 3: Working With Financial Statements

Earnings before interest and taxes is $74,300. Interest is $8,300 and depreciation is $9,700. What is the cash coverage ratio?

What is the cash coverage ratio for 2015?

Use the following statement of ﬁnancial position and statement of comprehensive income What is the days' sales in inventory for Bluebird? (Use average inventory.)

Which of the following are considered a use of cash?

Calculate gross proﬁt ratio given the following information: accounts receivable = $3,500; inventory = $4,500; receivable turnover = 80 times; inventory turnover = 18 times.

Tron, Inc. of Guelph has a times interest earned ratio of 4.1. Based on this ratio, a creditor knows that Tron's EBIT must decline by more than __________ before Tron will be unable to cover its interest Expense.

What is the cash coverage ratio?

Use the following statement of ﬁnancial position and statement of comprehensive income Accounts payable for 2015 will have a value of _____ % on the ﬁrm's common-size ﬁnancial statement.

Calculate the times interest earned ratio given the following information: depreciation expense = $6,000; EBIT = $90,000; cash coverage ratio = 8 times.

Calculate the return on equity given the following information: common shares outstanding = 250,000; earning per share = $2.00; total assets = $2,000,000; total equity = $800,000.

Margo's Dress Shoppe had the following values as of the end of last year and the end of this year. Which of the following are sources of cash for the year?

Which one of the following will increase the return on equity as computed using the Du Pont identity given that all else is held constant?

Big Foot Wholesalers has sales of $1,387,400, costs of goods sold of $891,400, inventory of $188,936, and accounts receivable of $94,800. How many days, on average, does it take the ﬁrm to Sell its inventory assuming that all sales are on credit?

Gateway Lodging has annual sales of $1.22 million, total debt of $380,000, total equity of $750,000, and a proﬁt margin of 7.45 %. What is the return on assets?

Which of the following statements is true?

Calculate cash coverage ratio given the following information: depreciation expense = $6,000; EBIT = $12,000; times interest earned = 4 times.

Nu Plastics has accounts receivable of $6,400, inventory of $11,600, cash of $1,300, accounts payable of $8,800, sales of $117,600, and cost of goods sold of $89,300. What is the net working Capital turnover rate?

Stephen's Auto Body Shop (Oshawa) has a debt-equity ratio of .6, a total asset turnover of 1.43, and a proﬁt margin of 5 %. The ﬁrm has a return on assets of _____ % and a return on equity of _____ %)

Which of the following are considered a source of cash?

Glen Acre Wines has sales of $682,100, total debt of $285,000, total equity of $323,900, and a proﬁt margin of 8 %. What is the return on assets?

Stephen's Auto Body Shop (Oshawa) has a debt-equity ratio of .6, a total asset turnover of 1.43, and a proﬁt margin of 5 %. The ﬁrm has a return on assets of _ % and a return on equity of _ %)