Chap003PracticeSolns

Chap003PracticeSolns - Chapter 03 - Working with Financial...

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Chapter 03 - Working with Financial Statements Chapter 03 Working with Financial Statements 1. The formula which breaks down the return on equity into three component parts is referred to as which one of the following? A. equity equation B. profitability determinant C. SIC formula D. Du Pont identity E. equity performance formula 2. Which one of the following is a source of cash? A. increase in accounts receivable B. decrease in notes payable C. decrease in common stock D. increase in accounts payable E. increase in inventory 3. Which one of the following is a use of cash? A. increase in notes payable B. decrease in inventory C. increase in long-term debt D. decrease in accounts receivables E. decrease in common stock 4. Which one of the following is a source of cash? A. repurchase of common stock B. acquisition of debt C. purchase of inventory D. payment to a supplier E. granting credit to a customer 5. Which one of the following is a source of cash? A. increase in accounts receivable B. decrease in common stock C. decrease in long-term debt D. decrease in accounts payable E. decrease in inventory 3-1
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Chapter 03 - Working with Financial Statements 6. On the Statement of Cash Flows, which of the following are considered financing activities? I. increase in long-term debt II. decrease in accounts payable III. interest paid IV. dividends paid A. I and IV only B. III and IV only C. II and III only D. I, III, and IV only E. I, II, III, and IV 7. On the Statement of Cash Flows, which of the following are considered operating activities? I. costs of goods sold II. decrease in accounts payable III. interest paid IV. dividends paid A. I and III only B. III and IV only C. I, II, and III only D. I, III, and IV only E. I, II, III, and IV 8. According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities. A. decrease; operating B. decrease; financing C. increase; operating D. increase; financing E. increase; investment 9. An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values. A. increase in the cash ratio B. increase in the net working capital to total assets ratio C. decrease in the quick ratio D. decrease in the cash coverage ratio E. increase in the current ratio 3-2
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Chapter 03 - Working with Financial Statements 10. A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit? A. current B. cash C. debt-equity D. quick E. total debt 11. A firm has an interval measure of 48. This means that the firm has sufficient liquid assets to do which one of the following?
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Chap003PracticeSolns - Chapter 03 - Working with Financial...

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