Beruflich Dokumente
Kultur Dokumente
Identify the return on equity (ROE) and return on assets (ROA) for the company selected:
What does this mean for the company? How would you describe their liquidity position?
How did you get to this conclusion?
Compare ROE to ROA. Which is the most important? Why?
Comment on the companys profit margin, and explain whether you feel it is good or bad
in performance.
Analyze the balance sheet and income statements for your company for the 2 most recent years.
Is the company in better or worse financial shape for the most recent year?
Use specific details from the balance sheet and income statement to support your
position.
Return on equity
Return on assets
Gross margin
Price to earnings ratio
Current ratio
Debt to assets ratio
Inventory turnover ratio
Based on the ratio calculations for the 2 years, discuss the health of the corporation using the
ratios you calculated to support your statements.
2.
Select a global article published within the last year-150 to 200 words to the following,
providing specific examples to support your answers:
Summarize the article, including the critical issues that the article discusses.
Do you support or disagree with the article? Explain why.
Identify the critical issues.
Discuss the conclusions you came to after reading this article.
Do you agree or disagree with the article based on the critical issues you identified?
Provide examples to support your stance.
3. 150 to 200 words to the following, providing specific examples to support your answers:
Which would you expect to have a higher current ratio: a jewelry store or an online
bookstore? Why?
Questions
Question 1
Current liabilities are defined as liabilities with a maturity of less than a year.
True
False
1 points
Question 2
A decline in the Net fixed assets account between year-end 2013 and year-end 2014 is a clear indication
that fixed assets were sold during 2014.
True
False
1 points
Question 3
Accounting rules require U.S. companies to depreciate research and development (R&D) expenditures
using the straight-line method.
True
False
1 points
Question 4
True
False
1 points
Question 5
The accrual principle requires that revenue not be recognized until payment from a sale is received.
True
False
1 points
Question 6
When reporting financial performance for tax purposes, U.S. companies prefer to use accelerated
depreciation methods over the straight-line method.
True
False
1 points
Question 7
You can construct a sources and uses statement for 2014 if you have a company's year-end balance
sheets for 2014 and 2015.
True
False
1 points
Question 8
A company's return on assets will always equal or exceed its profit margin.
True
False
1 points
Question 9
All else equal, a firm would prefer to have a higher gross margin.
True
False
1 points
Question 10
An inventory turnover ratio of 10 means that, on average, items are held in inventory for 10 days.
True
False
1 points
Question 11
A company's price-to-earnings ratio is always equal to one minus its earnings yield.
True
False
1 points
Question 12
True
False
1 points
Question 13
All else equal, an increase in a company's asset turnover will decrease its ROE.
True
False
1 points
Question 14
True
False
1 points
Question 15
JM Case Inc. has a market value of $5 million with 500,000 shares outstanding. The book value of its
equity is $1,750,000. What is JM Case's price per share?
A. $3.50
B. $5
C. $10
D. $25
E. $50
1 points
Question 16
A company purchases a new $10 million building, financed half with cash and half with a bank loan. How
would this transaction affect the company's balance sheet?
A. Net plant and equipment rises $10 million; cash falls $10 million; bank debt rises $5
million.
B. Net plant and equipment rises $5 million; cash falls $10 million; bank debt rises $5
million.
C. Net plant and equipment rises $5 million; cash falls $5 million; bank debt rises $5 million.
D. Net plant and equipment rises $10 million; cash falls $5 million; bank debt rises $5
million.
1 points
Question 17
The book value of a firm is:
A. equivalent to the firm's market value provided that the firm has some fixed assets.
C. generally greater than the market value when fixed assets are included.
E. adjusted to the market value whenever the market value exceeds the stated book value.
1 points
Question 18
Which of the following is NOT a major category on the cash flow statement?
1 points
Question 19
increase in inventory
1 points
Question 20
The sources and uses of cash over a stated period of time are reflected on the:
A. income statement.
B. balance sheet.
1 points
Question 21
Which of the following is a reason why a company's market value of equity differs from its book value of
equity?
Shareholders are keenly aware of book values, but have little interest in market values.
Accountants' charges for the cost of equity are often higher than they should be.
Values of assets on the balance sheet typically reflect historical cost, adjusted for
appropriate depreciation
1 points
Question 22
Breakers Bay Inc. 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. All else held constant, how will this accomplishment be reflected in the firm's
financial ratios?
1 points
Question 23
At the end of 2014, Stacky Corp. had $500,000 in liabilities and a debt-to-assets ratio of 0.5. For 2014
Stacky had an asset turnover of 3.0. What were annual sales for Stacky in 2014?
$333,333
$1,200,000
$1,800,000
$3,000,000
1 points
Question 24
In comparison to industry averages, Okra Corp. has a low inventory turnover, a high current ratio, and
an average quick ratio. Which of the following would be the most reasonable inference about Okra
Corp.?
1 points
Question 25
Ratios that measure how efficiently a firm manages its assets and operations to generate net income are
referred to as _____ ratios.
financial leverage
coverage
profitability
1 points
Question 26
If the debt-to-assets ratio is greater than 0.50, then the debt-to-equity ratio must be less
than 1.0.
Long-term creditors would prefer the times-interest-earned ratio be 1.4 rather than 1.5.
To realize the best risk and reward profile, financial leverage should be maximized
Question 27
1 points
Question 28
The most popular yardstick of financial performance among investors and senior managers is the:
profit margin
return on equity
return on asset
times-burden-covered ratio
earning yields
1 points
Question 29
The book value of Little Statistic's total assets is $400,000. Suppose Number Crunching Inc. acquires
Little Statistic's assets for $1 million and finances the purchase by selling $600,000 in new stock,
$300,000 in new debt, and reducing cash by $100,000. Describe how the acquisition affects Number
Crunching's balance sheet.
QUESTION 30
1.