1. For a firm that has no debt in its capital structure: a) ROE < ROA. b) ROE > ROA. c) ROE = ROA. d) None of the above.
2. Liquidity ratio: Lionel, Inc., has current assets of $623,122, including inventory of
$241,990, and current liabilities of $378,454. What is the quick ratio? a) None of the above. b) 1.01 c) 0.64 d) 1.65
3. Liquidity ratio: Bathez Corp. has receivables of $334,227, inventory of $451,000,
cash of $73,913, and accounts payables of $469,553. What is the firm's current ratio? a) 1.67 b) 0.73 c) 1.83 d) None of the above
4. 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? a) $81,234 b) $13,403,567 c) $881,234 d) $1,340,357
5. Profitability ratio: Juventus Corp has total assets of $4,744,288, total debt of
$2,912,000, and net sales of $7,212,465. Their net profit margin for the year is 18
percent. What is Juventus's ROA? a) None of the above b) 18% c) 27.4% d) 25.6%
6. Which one of the following statements is NOT correct?
a) A firm that uses debt magnifies the return to its shareholders.
b) A leveraged firm is less risky than a firm that is not leveraged.
c) All of the above statements are correct.
d) A leveraged firm is more risky than a firm that is not leveraged.
7. Leverage ratio: Your firm has an equity multiplier of 2.47. What is its debt-to- equity ratio? a) 1.47 b) 0.60 c) 0 d) 1.74
8. Leverage ratio: Dreisen Traders has total debt of $1,233,837 and total assets of
$2,178,990. What are the firm's equity multiplier and debt-to-equity ratio? a) 1.31; 2.31 b) 0.75; 1.75 c) 1.75; 0.75 d) 2.31; 1.31
9. Efficiency ratio: Jet, Inc., has net sales of $712,478 and accounts receivables of
$167,435. What are the firm's accounts receivables turnover and days' sales outstanding? a) 5.2 times; 61.3 days
b) 4.26 times; 85.7 days c) 0.24 times; 78.5 days d) None of the above
10. Efficiency ratio: Ellicott City Manufacturers, Inc., has sales of $6,344,210, and a
gross profit margin of 67.3 percent. What is the firm's cost of goods sold? a) $274,560 b) None of the above c) $2.074,557 d) $2,745,640