Midterm1_answer - 1. The financial ratio measured as net...

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The financial ratio measured as net income divided by total assets is known as the firm’s: a. profit margin. b. return on assets. c. return on equity. d. asset turnover. e. earnings before interest and taxes. 2. The three parts of the Du Pont identity can be generally described as: a. operating efficiency, asset use efficiency and firm profitability. b. short term solvency, operating efficiency and asset use efficiency. c. the equity multiplier, the profit margin and the total asset turnover. d. the debt-equity ratio, the capital intensity ratio and the profit margin. e. the total debt ratio, the current ratio, and the inventory turnover. 3. An annuity stream of cash flow payments is a set of: a. level cash flows occurring each time period for a fixed length of time. b. level cash flows occurring each time period forever. c. increasing cash flows occurring each time period for a fixed length of time. d. increasing cash flows occurring each time period forever. e. arbitrary cash flows occurring each time period for no more than 10 years. 4. The dividend payout ratio is calculated as: a. net income minus additions to retained earnings. b. dividends divided by the change in retained earnings. c. net income minus dividends. d. dividends divided by net income. e. one plus the retention ratio. 5. You are comparing two annuities which offer monthly payments for ten years. Both annuities are identical with the exception of the payment dates. Annuity A pays on the first of each month while annuity B pays on the last day of each month. Which one of the following statements is correct concerning these two annuities? a. Both annuities are of equal value today. b. Annuity B is an annuity due. c. Annuity A has a higher future value than annuity B. d. Annuity B has a higher present value than annuity A. e.
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This note was uploaded on 06/15/2008 for the course ACC 501 504 taught by Professor Na during the Spring '08 term at University of Texas at Austin.

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Midterm1_answer - 1. The financial ratio measured as net...

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