Question 1

What is the return on equity for 2011?
A)5.7%
B)6.8%
C)13.0%
D)15.3%
E)16.0%

Accepted Answer

Return on equity for 2011 = $481 F1F1F1S1F1F1F10 ($3,000 + $710)= .13 = 13%

Question 2

Rosita's Restaurant has sales of $5,000,total debt of $1,300,total equity of $2,400,and a profit margin of 6%.What is the return on assets?
A)8.11%
B)12.50%
C)23.08%
D)27.13%
E)135.13%

Accepted Answer

Return on assets = (.06 F1F1F1S1F1F1F10 $5,000)F1F1F1S1F1F1F10 ($1,300 + $2,400)= $300 F1F1F1S1F1F1F10 $3,700 = .08108 = 8.108%

Question 3

Patti's has net income of $1,800,a price-earnings ratio of 12,and earnings per share of $1.20.How many shares of stock are outstanding?
A)1,200
B)1,400
C)1,500
D)1,600
E)1,800

Accepted Answer

Number of shares = $1,800 F1F1F1S1F1F1F10 $1.20 = 1,500

Question 4

In 2011,how many days on average did it take Bayside to sell its inventory?
A)126.1 days
B)127.9 days
C)153.8 days
D)176.5 days
E)178.9 days

Accepted Answer

Inventory turnover for 2011 = $4,060 F1F1F1S1F1F1F10 $1,990 = 2.04;Days' sales in inventory = 365 F1F1F1S1F1F1F10 2.04 = 178.9 days

Question 5

A firm has a return on equity of 15%.The debt-equity ratio is 50%.The total asset turnover is 1.25 and the profit margin is 8%.The total equity is $3,200.What is the amount of the net income?
A)$480
B)$500
C)$540
D)$600
E)$620

Accepted Answer

Using the Du Pont identity: Total assets = (1 + .50)F1F1F1S1F1F1F10 $3,200 = $4,800;Total sales = $4,800 F1F1F1S1F1F1F10 1.25 = $6,000;Net income = $6,000 F1F1F1S1F1F1F10 .08 = $480

Question 6

A firm has a market capitalization of $2 million,market value of interest bearing debt of $1 million,book value of interest bearing debt of $500,000 and cash of $100,000.What is the enterprise value?
A)$2.5 million
B)$2.9 million
C)$3.0 million
D)$3.5 million
E)$3.6 million

Accepted Answer

Enterprise value = $2 million + $1 million - $100,000 = 2.9 million

Question 7

Lee Sun's has sales of $3,000,total assets of $3,000,and a profit margin of 5%.The firm has a total debt ratio of 60%.What is the return on equity?
A)5%
B)12.5%
C)23.2%
D)41.3%
E)250%

Accepted Answer

Return on equity = (.05 F1F1F1S1F1F1F10 $3,000)F1F1F1S1F1F1F10 [$3,000 F1F1F1S1F1F1F10 (1 - .60)] = $150 F1F1F1S1F1F1F10 $1,200 = 12.5%

Question 8

A firm has 5,000 shares of stock outstanding,sales of $6,000,net income of $800,a price-ratio of 10,and a book value per share of $.50.What is the market-to-book ratio?
A)1.6
B)2.4
C)3.0
D)3.2
E)3.6

Accepted Answer

Earnings per share = $800 F1F1F1S1F1F1F10 5,000 = $.16;Price per share = $.16 F1F1F1S1F1F1F10 10 = $1.60;Market-to-book ratio = $1.60 F1F1F1S1F1F1F10 $.50 = 3.2

Question 9

What is the equity multiplier for 2011?
A)1.6
B)1.8
C)2.0
D)2.3
E)2.5

Accepted Answer

Equity multiplier for 2011 = $6,040 F1F1F1S1F1F1F10 ($3,000 + $710)= 1.6

Question 10

What is the times interest earned ratio for 2011?
A)30
B)36
C)40
D)50
E)54

Accepted Answer

Times interest earned for 2011 = $1,200 F1F1F1S1F1F1F10 $30 = 40

Question 11

Samuelson's has a debt-equity ratio of 40%,sales of $8,000,net income of $600,and total debt of $2,400.What is the return on equity?
A)6.25%
B)7.50%
C)9.75%
D)10.00%
E)11.25%

Accepted Answer

Return on equity = $600 F1F1F1S1F1F1F10 ($2,400 F1F1F1S1F1F1F10 .40)= .10 = 10%

Question 12

A firm has 5,000 shares of stock outstanding,sales of $6,000,an enterprise value of $5 million and an EBITDA of 1 million.What is the enterprise value multiple?
A)2.2
B)2.4
C)3.0
D)4.0
E)5.0

Accepted Answer

Enterprise value multiple = enterprise value/EBITDA = $5 million/$1 million = 5.

Question 13

A firm has net working capital of $600,net fixed assets of $2,400,sales of $8,000,and current liabilities of $800.How many dollars worth of sales are generated from every $1 in total assets?
A)$2.11
B)$2.32
C)$3.73
D)$4.52
E)$6.70

Accepted Answer

Total asset turnover = $8,000 F1F1F1S1F1F1F10 [($600 + $800)+ $2,400] = 2.11;Every $1 in total assets generates $2.11 in sales.

Question 14

Windswept,Inc.has 90 million shares of stock outstanding.Its price-earnings ratio for 2011 is 12.What is the market price per share of stock?
A)$57.12
B)$59.94
C)$62.82
D)$64.13
E)$65.03

Accepted Answer

Earnings per share for 2011 = $481 million F1F1F1S1F1F1F10 90 million = $5.3444;Market price per share = $5.3444 F1F1F1S1F1F1F10 12 = $64.13

Question 15

Jupiter Explorers has $6,400 in sales.The profit margin is 4%.There are 6,400 shares of stock outstanding.The market price per share is $1.20.What is the price-earnings ratio?
A)13
B)14
C)21
D)30
E)48

Accepted Answer

Earnings per share = (.04 F1F1F1S1F1F1F10 $6,400)F1F1F1S1F1F1F10 6,400 = .04;Price-earnings ratio = $1.20 F1F1F1S1F1F1F10 .04 = 30

Question 16

Frederico's has a profit margin of 6%,a return on assets of 8%,and an equity multiplier of 1.4.What is the return on equity?
A)6.7%
B)8.4%
C)11.2%
D)14.6%
E)19.6%

Accepted Answer

Return on equity = 8% F1F1F1S1F1F1F10 1.4 = 11.2%,using the Du Pont Identity

Question 17

What is the debt-equity ratio for 2011?
A)22.5%
B)26.2%
C)35.5%
D)45.1%
E)47.7%

Accepted Answer

Debt-equity ratio for 2011 = ($1,170 + $500)F1F1F1S1F1F1F10 ($3,500 + $1,200)= .355 = 35.5%

Question 18

What is the cash coverage ratio for 2011?
A)11.6
B)12.8
C)13.7
D)17.3
E)18.8

Accepted Answer

Cash coverage ratio for 2011 = ($810 + $400)F1F1F1S1F1F1F10 $70 = 17.3

Question 19

What is the quick ratio for 2011?
A).82
B).95
C)1.36
D)2.18
E)2.28

Accepted Answer

Quick ratio for 2011 = ($2,440 - $1,520)F1F1F1S1F1F1F10 $1,120 = .82

Question 20

What is the days' sales in receivables in 2011?
A)31.8 days
B)33.7 days
C)38.4 days
D)41.9 days
E)47.4 days

Accepted Answer

Accounts receivable turnover for 2011 = $8,450 F1F1F1S1F1F1F10 $780 = 10.83;Days' sales in receivables for 2011 = 365 F1F1F1S1F1F1F10 10.83 = 33.7

Quiz 3: Financial Statements Analysis and Long-Term Planning

What is the return on equity for 2011?

Rosita's Restaurant has sales of $5,000,total debt of $1,300,total equity of $2,400,and a profit margin of 6%.What is the return on assets?

Patti's has net income of $1,800,a price-earnings ratio of 12,and earnings per share of $1.20.How many shares of stock are outstanding?

In 2011,how many days on average did it take Bayside to sell its inventory?

A firm has a return on equity of 15%.The debt-equity ratio is 50%.The total asset turnover is 1.25 and the profit margin is 8%.The total equity is $3,200.What is the amount of the net income?

A firm has a market capitalization of $2 million,market value of interest bearing debt of $1 million,book value of interest bearing debt of $500,000 and cash of $100,000.What is the enterprise value?

Lee Sun's has sales of $3,000,total assets of $3,000,and a profit margin of 5%.The firm has a total debt ratio of 60%.What is the return on equity?

A firm has 5,000 shares of stock outstanding,sales of $6,000,net income of $800,a price-ratio of 10,and a book value per share of $.50.What is the market-to-book ratio?

What is the equity multiplier for 2011?

What is the times interest earned ratio for 2011?

Samuelson's has a debt-equity ratio of 40%,sales of $8,000,net income of $600,and total debt of $2,400.What is the return on equity?

A firm has 5,000 shares of stock outstanding,sales of $6,000,an enterprise value of $5 million and an EBITDA of 1 million.What is the enterprise value multiple?

A firm has net working capital of $600,net fixed assets of $2,400,sales of $8,000,and current liabilities of $800.How many dollars worth of sales are generated from every $1 in total assets?

Windswept,Inc.has 90 million shares of stock outstanding.Its price-earnings ratio for 2011 is 12.What is the market price per share of stock?

Jupiter Explorers has $6,400 in sales.The profit margin is 4%.There are 6,400 shares of stock outstanding.The market price per share is $1.20.What is the price-earnings ratio?

Frederico's has a profit margin of 6%,a return on assets of 8%,and an equity multiplier of 1.4.What is the return on equity?

What is the debt-equity ratio for 2011?

What is the cash coverage ratio for 2011?

What is the quick ratio for 2011?

What is the days' sales in receivables in 2011?