BUSI 320 Read & Interact Chapter 3 Assignment solutions complete answers

BUSI 320 Read & Interact Chapter 3 Assignment solutions complete answers 

 

A major problem during inflationary times is that profit may be more a function of

 

Asset utilization ratios include all of the following except:

 

If the company has a total asset turnover ratio of 4 times and sales of $2,500,000, what is the level of the company’s total assets?

 

Ratio analysis should not include trend analysis because recent ratios are the only relevant information.

 

An investor’s secondary consideration is liquidity and debt utilization ratios.

 

The company has sales of $10,000,000, total assets of $2,400,000, stockholders’ equity of $2,000,000, and net income of $500,000. Calculate the company's profit margin.

 

The company has sales of $10,000,000, total assets of $2,400,000, fixed assets of $1,000,000, inventory of $600,000, and accounts receivable of $500,000. The company's total asset turnover is equal to _____ times.

 

Deflation typically enhances firms’ profitability

 

A bondholder’s secondary consideration is the capacity of the firms’ profit to cover debt obligations.

 

If a company has a quick ratio of 1.25 times, current assets of $25,000 and inventory of $5,000, the current liabilities balance is equal to     

 

The company has sales of $10,000,000, total assets of $2,400,000, stockholders’ equity of $2,000,000, and net income of $500,000. What is the company's return on equity?

 

If the company’s fixed asset turnover ratio is 9 and the industry average is 6, the company’s fixed asset turnover ratio is      the industry average.

 

The company has total assets of $2,400,000, inventory of $600,000, fixed assets of $1,000,000, and current liabilities of $530,000. What is the company’s quick ratio?

 

A company has earnings before interest and taxes of $1,500,000, interest in 30% of its total debt of $600,000, lease payments are $50,000, and its tax rate is 40%. What is the company’s fixed charge coverage ratio?

 

For     , the primary emphasis is on the firm’s ability to pay off short-term obligations as they come due.

 

Asset utilization ratios includes: 

 

If the company’s return on equity is 18% times and the industry average is 15% times, a company’s return on equity is    the industry average.

 

If the company’s fixed charged coverage ratio is 8 times and the industry average is 6 times, the company’s fixed charge coverage ratio is     the industry average.

 

If the company’s total asset turnover ratio is 3 times and the industry average is 10 times, the company’s total asset turnover is     the industry average.

 

Deflation can be described as    .

 

From the investor's perspective, which ratio category is of primary importance?

 

Trend analysis can be described as which of the following?

 

A bondholder is likely to be primarily influenced by which of the following ratio categories?

 

Inflation is a source of ______ on the financial reporting of the firm.

 

People in various functional areas of a business must be familiar with     analysis.

 

For ___ ratios, the primary emphasis is on the firm's ability to pay off short-term obligations as they come due.

 

The company has return on equity of 30% and stockholders' equity of $4,000,000. What is the company's net income?

 

What does a fixed turnover ratio of 4 times represent?

 

If a company has a profit margin of 6% and sales are $1,800,000, what is its net income?

 

What does a profit margin of 20% represent?

 

If the company's total asset turnover ratio is 3 times and the industry average is 7 times, the company's total asset turnover ratio is _____ the industry average.

 

The company has sales of $10,000,000, total assets of $2,400,000, fixed assets of $1,000,000, inventory of $600,000, and accounts receivable of $500,000. What is the company's fixed asset turnover?

 

If a company has a receivables turnover ratio of 10 and accounts receivable of $750,000, what is the company’s level of sales on credit?

 

Which of the following organizations provide industry data that can be used to evaluate a company’s operating performance?

 

What does a fixed charge coverage ratio of 8 times indicate?

 

If the company’s times interest earned ratio is 8 times and interest is $60,000, the company’s earnings before interest and taxes is equal to    .

 

The company has sales of $10,000,000, total assets of $2,400,000, stockholders’ equity of $2,000,000, and net income of $500,000. The company’s return on assets is    .

 

What does an average collection period of 30 days indicate for a company?

 

Which of the following is a profitability ratio?

 

The company has sales of $10,000,000, total assets of $2,100,000, fixed assets of $1,000,000, inventory of $600,000, and accounts receivable of $500,000. The company's average collection period is _____ days.

 

If the company's inventory turnover ratio is 10 times and industry average is 12 times, the company's inventory turnover ratio is _____ the industry average.

 

The company has sales of $10,000,000, total assets of $2,400,000, fixed assets of $1,000,000, inventory of $600,000, and accounts receivable of $500,000. The company's inventory turnover ratio is _____ times.

 

Besides changing prices, other elements of distortion in the financial evaluation of a company may include which of the following:

 

What does a receivables turnover of 7 times represent?

 

The company has total assets of $2,400,000, accounts receivable of $500,000, inventory of $600,000, cash & marketable securities of $20,000, and current liabilities of $530,000. The company's current ratio is _____ times.

 

If the company’s times interest earned ratio is 8 times and the industry average is 5 times, a company’s times interest earned ratio is     the industry average.

 

The company has current liabilities of $530,000, long-term liabilities of $1,000,000, total assets of $2,400,000, and stockholders’ equity of $870,000. The company's debt to total assets ratio is

 

If the current ratio is 2 times, then the firm's current asset balance is ____ its current liabilities balance.

 

If a company has a quick ratio of 1.25 time, current assets of $25,000 and inventory of $5,000, the current liabilities balance is equal to _____

 

If the company's return on assets is 13% and the industry average is 10%, the company's return on assets ratio is __ the industry average.

 

The company has sales of $10,000,000, total assets of $2,400,000 fixed assets of $1,000,000, inventory of $600,000, and accounts receivable of $500,000. The company's total asset turnover is equal to ____ times

 

If the company's return on equity is 18% and the industry average is 15%, the company's return on equity ratio is ______ the industry average.

 

If the company's fixed charge coverage ratio is 4.5 times and income before fixed charges and taxes is $450,000, the company has a fixed charges balance of _____

 

Which of the following are liquidity ratios?

 

If a company has current assets of $800,000, total assets of $2,000,000, current liabilities of $500,000 and total liabilities of $1,100,000, its debt to total assets ratio is    .

 

Which of the following are debt utilization ratios?

 

    ratios are used to weigh and evaluate the operating performance of the firm.

 

Asset utilization ratios are used to measure management’s ability to

 

1.
Asset utilization ratios are used to measure management's ability to
 
 
3.
Cash payments may be necessary for all of the following except
 
 
4.
Debt utilization ratios indicate to what extent the firm is
 
 
5.
During periods of inflation, FIFO inventory accounting
 
 
6.
Financial forecasting is essential to the strategic ______ of the firm
 
 
7.
A firm that does not wish to borrow to meet anticipated sales growth may instead decide to
 
 
8.
The first step in developing the pro forma income statement is to
 
 
9.
Following steps needed to develop the pro forma income statement.
 
 
10.
If a company has a debt to total assets ratio of 50% and total assets of $5,000,000, what amount of debt is the company carrying?
 
 
12.
If the company's debt to total assets ratio is 39% and the industry average is 35%, the company's debt to total assets ratio is _____ the industry average.
 
 
13.
If the company's profit margin is 6% and the industry average is 9.5%, the company's profit margin is _____ the industry average.
 
 
16.
The importance of the pro forma income statement is to provide a projection of how much ______ is anticipated over the ensuing time period.
 
 
17.
In developing cash balance for the pro forma balance sheet, the financial manager is most likely to turn to the
 
 
19.
The information used to prepare the pro forma balance sheet comes from which of the following:
 
 
20.
In preparation of the pro forma income statement, which of the following items are deducted from gross profits to arrive at earnings after taxes?
 
 
21.
The inventory methods used most commonly for determining cost of goods sold include:
 
 
22.
It is crucial that a firm ensure that adequate cash is available to _______
 
 
23.
The ____ method assumes that accounts on the balance sheet will maintain a given percentage relationship to sales.
 
 
24.
The most comprehensive means of financial forecasting is to
 
 
25.
The process of dividing the pro forma income statement into smaller time frames is done to anticipate the seasonal and monthly patterns of which of the following?
 
 
26.
The production pan is dependent upon the ________ projection.
 
 
27.
Profitability ratios measure the company's ability to
 
 
28.
The _________ provides a projection of how much profit the firm anticipates making over the ensuing time period.
 
 
30.
Sales growth can be financed through which of the following?
 
 
31.
T/F: The generation of sales and profits ensures adequate cash on hand to meet financial obligations
 
 
32.
Using a systems approach, the first pro forma statement to be constructed is the
 
 
35.
What does a times interest earned ratio of 10 times indicate?
 
 
36.
What does a total asset turnover ratio of 1.5 times represent?
 
 
37.
What does return on assets of 12.5% represent?
 
 
42.
Which of the following is more likely to need to raise additional long-term capital to support its anticipated sales growth?
 
 
 
 
 
 
 
 
 
 
 

 

 

21.
What does an inventory turnover ratio of 7 times represent?
 
The Co. generates sales equivalent to 7 times its inventory value during the year.
22.
What does a time interest earned ratio of 10 times indicate?
 
Income before interest and taxes covers the interest obligation of the firm by 10 times.
23.
What does a total asset turnover ratio of times represent?
 
The Co. generated $1.50 in sales for $1 total assets?
 

 

1.
Asset utilization ratios are used to measure management's ability to
 
 
3.
besides finance, which other functional areas of a business must be familiar with ratio analysis
 
 
6.
a company has earnings before interest and taxes of $1.5mil, its tax rate is 40%, interest is 30% of its debt of $600k, and lease payments are $50k. what is the company's times interest earned ratio
 
 
9.
the company has sales of $10,000,000, total assets of $2,4000,000, fixed assets of $1,000,000, inventory of $600,000, and accounts receivable of $500,000. calculate the company's receivables turnover
 
 
15.
debt utilization ratios
 
 
17.
financial ratios are used to judge the operating _____ of the firm
 
 
22.
if the company has a return on assets ratio of 35% and net income is $750, 000, what is the total asset balance?
 
 
23.
if the company's average collection period is 25 days and industry average is 30 days, the company's average collection period is _____ the industry average
 
 
24.
if the company's current ratio is 2.5 times and the current liabilities are $600,000, what are current assets?
 
 
28.
if the company's receivables turnover is 7 times and the industry average is 10 times, the company's receivables turnover is _____ the industry average
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
33.
profitability ratios measure the company's ability to ___
 
 
35.
what does a current ratio of 2.5 times represent
 
 
36.
what does a debt to total assets ratio of 50% indicate about a company
 
 
39.
what does a return on equity of 15% represent
 
 
40.
what does a times interest earned ratio of 10 times indicate?
 
 
41.
which of the following are liquidity ratios