CH 4 FIN 315

# CH 4 FIN 315 - 1.Financial statement analysis helps...

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1.Financial statement analysis helps management and investors identify a firm's strengths and weaknesses. Managers can then take actions to exploit the strengths and improve the weaknesses, and investors can analyze the data and make estimates regarding the firm's future performance. True or False? True False -------------------------------------------------------------------------------- 2. The easier it is to convert an asset to cash at close to a given value, the more liquid the asset. True or false? True False -------------------------------------------------------------------------------- 3. Given the following balance sheet data, what is Firm A's current ratio? a. 2.12 b. 2.36 c. 2.60 d. 2.86 e. 3.14 -------------------------------------------------------------------------------- 4. Given the data below, what is Firm B's quick ratio? a. 2.01

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b. 2.24 c. 2.48 d. 2.76 e. 3.04 -------------------------------------------------------------------------------- 5. Given the data below, which firm is more liquid based on its liquidity ratios, A or B? a. A b. B -------------------------------------------------------------------------------- 6. The asset management ratios are designed to see if the amount of assets a firm has are consistent with its volume of sales. True or false? True False -------------------------------------------------------------------------------- 7. All of the asset turnover ratios are formed by dividing a balance sheet asset by annual sales. This tells us how frequently the assets are used up and replaced during a year. True or false? True False --------------------------------------------------------------------------------
8. Collins Corporation had sales of \$100,000, year-end receivables of \$12,000, inventories of \$21,500, and total assets of \$75,000. It uses a 365-day year for ratio calculations. What was its inventory turnover ratio? a. 3.77 b. 4.19 c. 4.65 d. 5.12 e. 5.63 -------------------------------------------------------------------------------- 9. Collins Corporation had sales of \$100,000, year-end receivables of \$12,000, inventories of \$21,500, and total assets of \$75,000. It uses a 365-day year for ratio calculations. What was Collins' total assets turnover ratio? a. 1.33 b. 1.46 c. 1.61 d. 1.77 e. 1.95 -------------------------------------------------------------------------------- 10. Collins Corporation had sales of \$100,000, year-end receivables of \$12,000, inventories of \$21,500, and total assets of \$75,000. It uses a 365-day year for ratio calculations. What was Collins' Days Sales Outstanding (DSO)? a. 39.2 b. 40.1 c. 41.7 d. 42.3 e. 43.8 days

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-------------------------------------------------------------------------------- 11. In 2006 Firm X had \$500 of assets and \$1,000 of sales. Its operating costs were \$700,
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## This note was uploaded on 12/09/2011 for the course FIN 315 taught by Professor Hunsader during the Spring '11 term at S. Alabama.

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CH 4 FIN 315 - 1.Financial statement analysis helps...

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