Question 1

Match between columns Premises: Reconciliation The Baxter Company had the following current account balances.
Beginning Ending Beginning Ending
Cash $ 300 $935 Accounts Payable $1,400 $1,750
Accounts Receivable 4,250 5,375 Accruals 615 875
Inventory 8,200 7,050
Current Assets 12,750 $13,360 Current Liabilities $2,015 $2,625

What change in the current accounts would be listed under Operating Activities on a Statement of Cash Flows?

Accepted Answer

The Answer of  $635 and Proceeds from the sale is...

Question 2

Emperor Corporation's financial statements for the last year are shown below. All figures are in thousands ($000). The firm paid a $1,000 dividend to its stockholders during the year. Two million shares of stock are outstanding. The stock is currently trading at a price of $50. There were no sales of new stock. Lease payments totaling $400 are included in cost and expense. 
  Develop Emperor's: 
Current Ratio 
Quick Ratio 
Average Collection Period (ACP)
Inventory Turnover 
Fixed Asset Turnover 
Total Asset Turnover 
Debt Ratio 
Debt to Equity ratio 
Times Interest Earned (TIE)
Cash Coverage 
Fixed Charge Coverage 
Return on Sales (ROS)
Return on Assets (ROA)
Return on Equity (ROE)
Price Earnings Ratio (P/E)
Market to Book Value Ratio

Accepted Answer

The answer of Emperor Corporation's financial statements for the last...

Question 3

It is said that "ratio analysis doesn't give answers, it helps you ask the right questions." Explain the rationale behind that statement as it relates to a company undergoing a decline in its quick asset ratio while at the same time maintaining a stable current ratio.

Accepted Answer

The answer of It is said that "ratio analysis doesn't...

Question 4

Match between columns
                        Premises: Investing activity

Accepted Answer

The Answer of Sale of new 30-year bonds and Proceeds is...

Question 5

Return on Assets (ROA)measures a firm's ability to utilize its assets without regard to the sources of capital that fund those assets. The return on equity can bias the results by the degree to which the company leverages itself (uses debt).

Accepted Answer

ROA is calculated as net income divided by total assets, while return on equity (ROE) is calculated as net income divided by total equity. ROE can be biased by the degree of leverage, as it only considers the portion of assets funded by equity, while ROA considers all assets regardless of their funding source.

Question 6

Ballantine Inc. has the following financial statements ($omitted). Ballantine paid no dividends and sold no new stock during the year. 
Balance Sheets 
  a. Construct Ballantine's statement of cash flows. Show supporting calculations and display the result as it would appear on a Statement of Cash Flows. 
b. Calculate the following ratios for Ballantine. 
Quick Ratio 
ACP 
Total Asset Turnover 
Inventory Turnover (COGS)
TIE

Accepted Answer

The answer of Ballantine Inc. has the following financial statements...

Question 7

Smart Motors' return on sales is 3 percent and its total asset turnover is 2.2. What is Smart's ROA?

Accepted Answer

The answer of Smart Motors' return on sales is 3...

Question 8

Petersen, Inc. had the following balances on their balance sheet as of 12/31/20X4 (this is the complete balance sheet): 
  a. How much is Petersen's Net Working Capital as of the balance sheet date? 
b. What is Petersen's Current Ratio? 
c. If Net Income for Petersen for 20X4 was $50,000, what was its Return on Assets? 
d. If Petersen has Earnings Before Taxes of $30,000 and a TIE Ratio of 7.0. What is its interest expense?

Accepted Answer

The answer of Petersen, Inc. had the following balances on...

Question 9

How does the Du Pont equation help us isolate problems in business performance?

Accepted Answer

The answer of How does the Du Pont equation help...

Question 10

Find the sales of the Sharkton Company using the following information: 
 Current ratio 2.0 
 Quick ratio 1.6 
 Current liabilities $200,000 
Inventory turnover based on COGS 8.0 
 Gross margin % 10%

Accepted Answer

The answer of Find the sales of the Sharkton Company...

Question 11

When a ratio calls for a balance sheet figure, should we use beginning, ending, or average values?

Accepted Answer

The answer of When a ratio calls for a balance...

Question 12

A firm has the following financial statements and paid a $1,000 dividend during the year. 
  a. Calculate cash from operating activities showing the current account changes separately. 
b. Calculate cash from financing activities. 
c. Calculate cash from investing activities. 
d. Develop a statement of cash flows including a reconciliation with the cash account.

Accepted Answer

The answer of A firm has the following financial statements...

Question 13

Emperor Corporation's financial statements for the last year are shown below. The firm paid a $1,000 dividend to its stockholders during the year. There were no sales of new stock. 
  Develop Emperor's Statement of Cash Flows.

Accepted Answer

The answer of Emperor Corporation's financial statements for the last...

Question 14

Given the following balance sheets for Joshua Trucking answer the next five questions. Joshua Trucking's net income was $12 million. It paid out $10 million in dividends. All numbers are in millions. 
  1. What is Joshua Trucking's cash flow from operations? 
2. What is Joshua Trucking's cash flow from investing activities? 
3. What is Joshua Trucking's cash flow from financing activities? 
4. What is Joshua Trucking's net cash flow? 
5. What is Joshua Trucking's return on equity?

Accepted Answer

The answer of Given the following balance sheets for Joshua...

Question 15

The Du Pont equations can be used to isolate problems.

Accepted Answer

The Du Pont equations break down return on equity (ROE) into three parts (net profit margin, asset turnover, and leverage) which can be individually analyzed to identify problem areas in a company's financial performance.

Question 16

Match between columns
                        Premises: Financing activity

Accepted Answer

The Answer of Proceeds from the sale of old machinery is...

Question 17

Match between columns
                        Premises: Operating activity

Accepted Answer

The Answer of Depreciation expense as a noncash item and is...

Question 18

Why does the stock market generally price stocks above the net value of the firm's assets? Your explanation should include the market's perception of the firm as a going concern.

Accepted Answer

The answer of Why does the stock market generally price...

Question 19

Explain the different types of activities presented in the statement of cash flows.

Accepted Answer

The answer of Explain the different types of activities presented...

Question 20

Listed below are the account balances for UBUS, Inc. The income statement balances are for the year, 20X4. The balance sheet balances are shown as of 1/1/20X4 and 12/31/20X4. They are listed in alphabetical order, NOT in the order they appear on the statements themselves. The applicable tax rate is 40%. You are to use this information to answer the following SEVEN questions (6-a through 6-g). 
 Income Statement for 20X4 
   a)What was the Quick Ratio for UBUS Inc. as of 12/31/20X4? 
a. Less than 1.0 
b. From 1.0 - 1.5 
c. From 1.51 - 1.9 
d. From 1.91 - 2.3 
e. More than 2.3 
b)What kind of impact will the change in the Accounts Receivable balance have on Operating Cash Flows portion of the Statement of Cash Flows in 20X4? 
a.Decrease operating cash flows by $10 
b.Decrease operating cash flows by $5 
c.Increase operating cash flows by $10 
d Increase operating cash flows by $5 
e. No impact 
c)Where will the change in Fixed Assets (gross)appear on the Statement of Cash Flows? 
a. The Operating Section 
b. The Investing Section 
c. The Financing Section 
d. It won't appear on the Statement of Cash Flows 
e. Can't tell from the information given 
d)What is UBUS Inc.'s Times Interest Earned (TIE)ratio for 20X4? 
a. Less than 2.0 
b. From 2.0 - 3.0 
c. From 3.1 - 4.0 
d. From 4.1 - 5.0 
e. More than 5.0 
e)What is UBUS Inc.'s Return on Assets (ROA)for 20X4? 
a. Less than 12.0% 
b. From 12.0% - 12.5% 
c. From 12.6% - 13.0% 
d. From 13.1% - 13.5% 
e. More than 13.5% 
f)What is UBUS Inc.'s Return on Sales (profit margin)for 20X4? 
a. Less than 9.0% 
b. From 9.0% - 11.0% 
c. From 11.1% - 13.0% 
d. from 13.1% - 15.0% 
e. More than 15% 
g)What is UBUS Inc.'s Debt Ratio as of 12/31/20X4? 
a. Less than 43.0% 
b. From 43.0% - 46.0% 
c. From 46.1% - 49.0% 
d. From 49.1 - 52.0% 
e. More than 52.0%

Accepted Answer

The answer of Listed below are the account balances for...

Quiz 3: Cash Flows and Financial Analysis

Match the following:

It is said that "ratio analysis doesn't give answers, it helps you ask the right questions." Explain the rationale behind that statement as it relates to a company undergoing a decline in its quick asset ratio while at the same time maintaining a stable current ratio.

Match the following:

Return on Assets (ROA)measures a firm's ability to utilize its assets without regard to the sources of capital that fund those assets. The return on equity can bias the results by the degree to which the company leverages itself (uses debt).

Smart Motors' return on sales is 3 percent and its total asset turnover is 2.2. What is Smart's ROA?

How does the Du Pont equation help us isolate problems in business performance?

Find the sales of the Sharkton Company using the following information: Current ratio 2.0 Quick ratio 1.6 Current liabilities $200,000 Inventory turnover based on COGS 8.0 Gross margin % 10%

When a ratio calls for a balance sheet figure, should we use beginning, ending, or average values?

Emperor Corporation's financial statements for the last year are shown below. The firm paid a $1,000 dividend to its stockholders during the year. There were no sales of new stock. Develop Emperor's Statement of Cash Flows.

The Du Pont equations can be used to isolate problems.

Match the following:

Match the following:

Why does the stock market generally price stocks above the net value of the firm's assets? Your explanation should include the market's perception of the firm as a going concern.

Explain the different types of activities presented in the statement of cash flows.