test2 - Chapter 2-Financial Statement and Cash Flow...

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Chapter 2—Financial Statement and Cash Flow Analysis MULTIPLE CHOICE 1. Which of the following items can be found on an income statement? a. Accounts receivable b. Long-term debt c. Sales d. Inventory ANS: C DIF: E REF: 2.1 Financial Statements 2. If you only knew a company’s total assets and total debt, which item could you easily calculate? a. Sales b. Depreciation c. Total equity d. Inventory ANS: C DIF: E REF: 2.1 Financial Statements 3. How do we calculate a company’s operating cash flow? a. EBIT - taxes + depreciation b. EBIT - taxes - depreciation c. EBIT + taxes + depreciation d. EBIT - Sales ANS: A DIF: E REF: 2.2 Cash Flow Analysis 4. Holding all other things constant, which of the following represents a cash outflow? a. The company sells a machine. b. The company acquires inventory. c. The company receives a bank loan. d. The company increases accounts payable. ANS: B DIF: E REF: 2.2 Cash Flow Analysis 5. Which of the following is a liquidity ratio? a. Quick ratio b. P/E- ratio c. Inventory turnover
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d. Equity multiplier ANS: A DIF: E REF: 2.3 Analyzing Financial Performance Using Ratio Analysis NARRBEGIN: Bavarian Sausage, Inc. Bavarian Sausage, Inc. Bavarian Sausage, Inc. posted the following balance sheet and income statement. Balance Sheet Cash $ 50,000 Accounts Payable $185,000 Accounts Receivable 125,000 Notes Payable 125,000 Inventories 225,000 Long-term debt 115,000 Net Plant and Equipment 525,000 Common Stock 350,000 Retained earnings 150,000 Total Assets $925,000 Total liabilities and Stockholders’ Equity $925,000 Income Statement Sales $525,000 Cost of goods sold 215,000 Depreciation 65,000 Earnings before interest and taxes 245,000 Interest expense 35,000 Net profit before taxes 210,000 Taxes (@ 40%) 84,000 Net income $126,000 NARREND 6. What is Bavarian Sausage, Inc.’s operating cash flow? a. $394,000 b. $191,000 c. $226,000 d. $359,000 ANS: C DIF: E REF: 2.2 Cash Flow Analysis NAR: Bavarian Sausage, Inc.
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What is the Bavarian Sausage, Inc.’s quick ratio? a. 0.5645 b. 1.2903 c. 1.9565 d. 0.8871 ANS: A DIF: E REF: 2.3 Analyzing Financial Performance Using Ratio Analysis NAR: Bavarian Sausage, Inc. 8. What is the Bavarian Sausage, Inc.’s average collection period? a. 14.39 days b. 4.20 days c. 122.56 days d. 86.90 days ANS: D DIF: E REF: 2.3 Analyzing Financial Performance Using Ratio Analysis NAR: Bavarian Sausage, Inc. 9. Bavarian Sausage, Inc. has 100,000 shares of common stock outstanding, but no preferred stock. The current price of Bavarian’s common stock is $15. What is the company’s P/E-ratio? a. 119.00 b. 1.26 c. 11.90 d. 12.60 ANS: C DIF: M REF: 2.3 Analyzing Financial Performance Using Ratio Analysis NAR: Bavarian Sausage, Inc.
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test2 - Chapter 2-Financial Statement and Cash Flow...

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