Chapter 1 quiz test

Chapter 1 quiz test - B. The informational value of a ratio...

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Multiple Choice Questions 1. Which of the following is likely to be the most informative source if you were interested in a company's business plan or strategy? A. Auditor's letter B. Management discussion and analysis C. Proxy statement D. Footnotes 2. Which of the following would not be considered a source of financing? A Notes receivable B. Common stockholders' equity C. Retained earnings D. Debentures 3. While determining the most profitable company from the given number of companies, which of the following would be the best indicator of relative profitability? A. Highest net income B. Highest retained earnings C. Highest return on equity D. Highest operating margin 4. Which of the following statements concerning financial ratios is incorrect? A. Accounting principles and methods used by a company will not affect financial ratios.
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Unformatted text preview: B. The informational value of a ratio in isolation is limited. C. A ratio is one number expressed as a percentage or fraction of another number. D. Calculation of financial ratios is not sufficient for a complete financial analysis of a company. 5. Which of the following statements is incorrect? A. It is possible for some markets to be more efficient than others. B. It is possible for markets to be efficient with respect to some information and inefficient with respect to other information. C. The market is likely to be more efficient with respect to companies where there is greater analyst following. D. The market is totally efficient with respect to companies providing regular dividends to investors. Answers 1 B 2 A 3 C 4 A 5 D...
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This note was uploaded on 02/16/2012 for the course FINA 470 taught by Professor Austin during the Fall '11 term at South Carolina.

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