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FIN 571 Week 2 Quiz

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FIN 571 Week 2 Quiz -

Multiple Choice Question 53

Which one of the following statements about trend analysis is NOT correct?

  • It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm.
  • This benchmark is based on a firm's historical performance.
  • The Standard Industrial Classification (SIC) System is used to identify benchmark firms.
  • All of these are true statements.

 

Multiple Choice Question 68

Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio?

  • None of these
  • 14.15 times
  • 15.42 times
  • 18.34 times

 

Multiple Choice Question 68      

Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars.

  • $1,715 million
  • $1,651 million
  • $1,421 million
  • $1,191 million

 

Multiple Choice Question 46

Coverage ratios, like times interest earned and cash coverage ratio, allow

  • a firm's creditors to assess how well the firm will meet its interest obligations.
  • a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense.
  • a firm's management to assess how well they meet short-term liabilities.
  • a firm's shareholders to assess how well the firm will meet its short-term liabilities.

 

Multiple Choice Question 54      

Peer group analysis can be performed by

  • management choosing a set of firms that are similar in size or sales, or who compete in the same market.
  • using the average ratios of this peer group, which would then be used as the benchmark.
  • identifying firms in the same industry that are grouped by size, sales, and product lines, in order to establish benchmark ratios.
  • Only a and b relate to peer group analysis.

 

Multiple Choice Question 61      

Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales of $3,436,812, what is its level of receivables?

  • $13,403,567
  • $881,234
  • $1,340,357
  • $81,234