Ch4 Assignment

A  2.25

B  1.5

C  1.12

D  1.23

A  sensitivity

B  industry average

C  trend

D  peer group

A  industry average

B  peer group

C  sensitivity

D  trend

A  industry average

B  sensitivity

C  peer group

D  trend

A  7.4%

B  10.90%

C  39.10%

D  9.20%

A  60%, 21%, 15%

B  55%, 12%, 16%

C  49%, 18%, 10%

D  53%, 19%, 13%

A  $7,528.10

B  $75,281.80

C  $514,250.00

D  $51,425.00

A  7.48%

B  5.79%

C  6.23%

D  4.53%

A  The lower the level of a firm’s debt, the higher the firm’s equity multiplier.

B  The tax benefit from using debt financing reduces a firm’s risk.

C  The lower the level of a firm’s debt, the higher the firm’s leverage.

D  The lower the level of a firm’s debt, the lower the firm’s equity multiplier.

A  The higher the liquidity ratios, the more liquid the firm and the better its ability to pay its short-term bills.

B  They measure the ability of a firm to meet short-term obligations with short-term assets without putting the firm in financial trouble.

C  There are two commonly used ratios to measure liquidity—current ratio and quick ratio.

D  For manufacturing firms, quick ratios will tend to be much larger than current ratios.

A  Days’ sales outstanding measures in days, the time a firm takes to convert its receivables into cash.

B  One ratio that measures the efficiency of a firm’s collection policy is days’ sales outstanding.

C  The more days that it takes a firm to collect on its receivables, the more efficient the firm is.

D  The accounts receivables turnover ratio measures how quickly the firm collects its credit sales.

A  2.5, 1.5

B  2.2, 1.4

C  1.5, 2.7

D  3.0, 1.8

A  20%

B  15%

C  25%

D  10%

A  $6,993,450

B  $8,346,200

C  $7,055,323

D  $7,593,600

A  $2.5 & 51.14

B  $2.14 & 49.26

C  $1.12 & 53.26

D  $1.97 & 50.66

A  0.97

B  $1

C  1.1

A  inventory

B  marketable securities

C  accounts payable

D  plant and equipment

A  7.1%; 0.53

B  7.1%; 1.90

C  3.7%; 0.53

D  3.7%; 1.90

A  4.87 times

B  None of these

C  5.17 times

D  8.12 times

A  $2

B  $1

C  1.82

D  None of these

A  3.47

B  1.47

C  $1

D  $2

A  12 times

B  11 times

C  13 times

D  None of these

A  None of these.

B  4.26 times; 86 days

C  5.2 times; 61 days

D  0.24 times; 79 days

A  $0

B  None of these

C  $777,777

D  $1 million

A  a firm’s creditors to assess how well the firm will meet its short-term liabilities other than interest expense.

B  a firm’s management to assess how well they meet short-term liabilities.

C  a firm’s shareholders to assess how well the firm will meet its short-term liabilities.

D  a firm’s creditors to assess how well the firm will meet its interest obligations.

A  A decrease in the net fixed assets

B  An increase in accounts payable

C  A decrease in depreciation expense

D  None of these

A  percentage of total net cash flow.

B  percentage of total sales.

C  percentage of total net income.

D  percentage of total assets.