# Chapter 3 Finance Practice

February 10, 2015

Chapter 3 Finance Practice

QUESTION 1

If the Debt/Equity Ratio is 0.50. What is the Debt Ratio?

 0.50 0.375 0.60 1 o.3333

QUESTION 2

If the Debt/Equity Ratio is 0.60. What is the Debt Ratio?

 0.40 0.375 0.60 1 o.4444

QUESTION 3

The Jamestown Group has equity of \$421,000, sales of \$792,000, and a profit margin of 6 percent. What is the return on equity?

 8.87 percent 6.19 percent 11.29 percent 10.27 percent 9.37 percent

QUESTION 4

Top Sound, Inc., has total assets of \$212,000, a debt-equity ratio of .6, and net income of \$9,500. What is the return on equity?

 6.87 percent 7.17 percent 7.34 percent 7.50 percent 7.67 percent

QUESTION 5

A firm has total equity of \$70,312.50, a profit margin of 8 percent, an equity multiplier of 1.6, and a total asset turnover of 1.3. What is the amount of the firm s sales?

 \$91,406 \$112,500 \$121,500 \$137,500 \$146,250

QUESTION 6

XYZ earned a net profit margin of 5.8% last year and had an equity multiplier of 3.6. If its total assets are \$84 million and its sales are 158 million, what is the firm’s return on assets?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 7

If the debt ratio is 0.80, the Equity Multiplier is:

 0.8 0.2 1 5 1.8 4

QUESTION 8

If the Debt/Equity Ratio is 0.80. What is the Debt Ratio?

 0.40 0.375 0.60 1 o.4444

QUESTION 9

ABC’s balance sheet indicates a book value of shareholders’ equity of \$742,470. The firm’s earning per share are \$2.2 and the price-earnings ratio is 12.63. If there are 47,822 shares outstanding, what is the market value per share? Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box. Hint: Market value per share is same as market price per share.

QUESTION 10

A firm has sales of \$350,000, a profit margin of 6 percent, a total asset turnover rate of 1.25, and an equity multiplier of 1.4. What is the return on equity?

 10.50 percent 7.50 percent 7.75 percent 11.11 percent 5.36 percent

QUESTION 11

If the debt ratio is 0.75, the Debt/Equity Ratio is:

 0.75 0.25 1 5 1.75 3

QUESTION 12

XYZ earned a net profit margin of 7.7% last year and had an equity multiplier of 3.2. If its total assets are \$114 million and its sales are 149 million, what is the firm’s debt ratio? Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 13

Wexford Hotels has sales of \$289,600, depreciation of \$21,400, interest of \$1,300, Operating Income of \$23,269.70, and a tax rate of 34 percent. What is the times interest earned ratio?

 20 17.9 18.5 16 19.8

QUESTION 14

A firm has total assets of \$682,000 and total equity of \$424,000. What is the debt-equity ratio?

 1.61 0.61 1.64 0.62

QUESTION 15

The Baker s Dozen has current liabilities of \$5,600, net working capital of \$2,100, inventory of \$3,900, and sales of \$13,500. What is the quick ratio? Assume pre-paid expenses are zero.

 0.68 0.7 1.38 1.47 2.08

QUESTION 16

If Roten, Inc., has a equity multiplier of 1.75, total asset turnover of 1.30, and profit margin of 8.5 percent, what is the return on equity (ROE)?

 19.34% 2.275% 1.75% 14.875%

QUESTION 17

ABC’s balance sheet indicates a book value of shareholders’ equity of \$809,850. The firm’s earning per share are \$2.7 and the price-earnings ratio is 9.12. If there are 41,087 shares outstanding, what is the market-to-book ratio? Enter your answer rounded off to two decimal points. Hint: Market value per share is same as market price per share

QUESTION 18

ABC earned a net profit margin of 4.3% last year and had an equity multiplier of 2.2. If its total assets are \$95 million and its sales are 120 million, what is the firm’s return on equity? Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 19

If the debt ratio is 0.20, the Equity Multiplier is:

 1.25 0.25 1.20 0.20 0.80 1.5

QUESTION 20

ABC Corporation has the following ratios: Total Asset Turnover= 1.6 Total debt to total assets= 0.5 Current Ratio= 1.7 Current Liabilities= \$2,000,000 Sales = \$16,000,000 What is the amount of current assets?

 2,000,000 3,200,000 3,400,000 1,000,000

QUESTION 21

A firm has net working capital of \$1,100 and current liabilities of \$2,800. What is the current ratio?

 .98 2.56 .39 .72 1.39

QUESTION 22

Blackstone, Inc., has net income of \$9,738, a tax rate of 35%, and interest expense of \$798. What is the times interest earned ratio?

QUESTION 23

Toast and Butter, Inc., has total assets of \$712,000 and an equity multiplier of 1.6. What is the debt-equity ratio?

 0.60 0.67 0.63 1.60 1.67

QUESTION 24

ABC’s balance sheet indicates a book value of shareholders’ equity of \$710,884. The firm’s earning per share are \$2.9 and the price-earnings ratio is 11.02. If there are 43,006 shares outstanding, what is the book value per share?Enter your answer rounded off to two decimal points. Do not enter \$ in the answer box. Hint: Market value per share is same as market price per share

QUESTION 25

If the debt ratio is 0.60, the Debt/Equity Ratio is:

 1.25 0.25 1.20 0.20 0.80 1.5

QUESTION 26

XYZ has total sales of \$215, assets of \$100, return on equity of 26%, and net profit margin of 8%. What is the amount of equity?

Enter you answer rounded off to two decimal points. Do not enter \$ in the answer box.

QUESTION 27

ABC’s Balance Sheet lists Current Assets of \$300, Current Liabilities of \$200, Fixed Assets of \$700, Long-Term Debt of \$400. ABC has 200 shares outstanding. What is the market-to-book ratio (MTB) if the market price per share is \$8?

 4 times 400 times 2 times 8 times 0.25 times

QUESTION 28

Smith Corporation has current assets of \$11,400, inventories of \$4,000, and a current ratio of 2.6. What is Smith s acid test ratio? Assume pre-paid expenses is zero.

 1.69 0.54 0.74 1.35

QUESTION 29

The ability of the firm to pay off short-term obligations as they come due is indicated by:

QUESTION 30

ABC, Inc., has a market-to-book ratio of 3, net income of \$84,018, a book value per share of \$21, and 53,226 shares of stock outstanding. What is the price-earnings ratio?