Time series ratio analysis of your own firm over time is an example of: A) internal assessment. B) external assessment. C) narcissistic assessment. D) cross sectional assessment. ANSWER A
Date: September 19th, 2020
Which of the following would be included in the calculation of net operating working capital? A) Accounts payable? B) Accruals C) Short-term notes payable D) Both A and B ANSWER D
Date: September 19th, 2020
The residual theory of dividends suggests that ________. A) different payout policies attract different types of investors but still do not change the value of a firm B) dividends are irrelevant in determining the value of a firm C) as long as a firm’s equity need exceeds the amount of retained earnings, no cash dividend […]
Date: September 19th, 2020
Spartacus Inc., has sales of $4,500,000, net income of $250,000, assets worth $3,700,000, and total common stockholder equity of $2,500,000. The ROE for Spartacus is: A) 5.56%. B) 6.76%. C) 10.00%. D) 55.56%. ANSWER C Explanation: C) ROE = NI/Equity = $250,000/$2,500,000 = 10.00%
Date: September 19th, 2020
According to the residual theory of dividends, if a firm’s equity need exceeds the amount of retained earnings, the firm would ________. A) borrow to pay the cash dividend B) sell additional stock to pay the cash dividend C) pay no cash dividends D) pay less dividends ANSWER C
Date: September 19th, 2020
Lakeview Industries had sales of $40 million and net income of $2 million in 2012. Lakeview paid a dividend of $1.5 million. Assuming that their beginning balance for retained earnings was $4 million, calculate their ending balance for retained earnings. A) $4.5 million B) $2.5 million C) $3 million D) $4 million ANSWER […]
Date: September 19th, 2020
Modern Comics Inc., has sales of $2,500,000, net income of $50,000, assets worth $1,700,000, and total common stockholder equity of $1,500,000. The ROE for the firm is: A) 68.00%. B) 60.00%. C) 2.94%. D) 3.33%. ANSWER D Explanation: D) ROE = NI/Equity = $50,000/$1,500,000 =3.33%
Date: September 19th, 2020
What is Regency’s net working capital in 2012 and 2011? A) $27 million; $12 million B) $315 million; $276 million C) $39 million; $27 million D) None of the above ANSWER A Explanation: A) NWC = C/A – C/L: 2012 = $171,000,000 – $144,000,000 = $27,000,00. 2011: = $144,000,000 – $132,000,000 = $12,000,000.
Date: September 19th, 2020
The DuPont method decomposes the ROE into the product of three other ratios. those ratios are: A) profit margin, asset turnover, and financial leverage. B) profit margin, inventory turnover, and financial leverage. C) current ratio, asset turnover, and profit margin. D) quick ratio, inventory turnover, and return on assets. ANSWER A
Date: September 19th, 2020
The clientele effect refers to ________. A) the relevance of dividend policy on a firm’s share value B) a firm’s ability to attract stockholders whose dividend preferences are similar to the firm’s dividend policy C) the informational content of dividends that helps in predicting the future earnings and growth of a firm D) the “bird-in-the-hand” […]
Date: September 19th, 2020
