CORPORATE FINANC 3 UPDATED ACTUAL EXAM QUESTIONS CORRECT ANSWERS GRADED
A PLUS
Question:
Which of the following is an operating performance ratio? Debt to total assets Times interest earned
Payout ratio Times interest earned and payout ratio None
Answer:
Times interest earned and Payout Ratio
Question:
Horizontal analysis compares the components of a balance sheet with a base item. T/F
Answer:
False
Question:
Since companies have different numbers of shares outstanding, it is not useful to compare earnings
per share ratios. T/F
Answer:
True
Question:
There are two ratios that help define the operating cycle. They are: receivables and inventory
turnover receivables and accounts payable inventory and accounts payable turnover none of these
Answer:
Receivables and accounts payable
Question:
,The ratio that shows the markup in price over the cost of goods sold is profit margins gross margin
ratio return on assets asset turnover none
Answer:
Gross margin ratio
Question:
The ratio that shows how investors value the stock is payout ratio earnings per share return on equity
return on assets none
Answer:
None
Question:
Financial strength ratios are utilized to help predict the long-run solvency of a company. T/F
Answer:
True
Question:
Ratio analysis is popular because ratios: summarize important info are useful in comparisons within
a company over time are useful in comparisons with other companies all the above
Answer:
All the above
Question:
ROE shows how much income was earned for every dollar invested by owners. T/F
Answer:
True
, Question:
A company's annual report is used primarily by the taxing authorities. T/F
Answer:
True
Question:
Managerial accounting is involved in: external reports internal reports tax reports economic reports
Answer:
Internal reports
Question:
Using an accelerated depreciation method for tax purposes would be an example of: managerial
accounting financial accounting tax accounting none
Answer:
Tax accounting
Question:
Owners in corporations are liable only for the amount they have invested and no more. T/F
Answer:
True
Question:
Information that can make a difference to the decision at hand is considered to be: reliable
comparable conservatism understandability none
Answer:
None - relevancy
A PLUS
Question:
Which of the following is an operating performance ratio? Debt to total assets Times interest earned
Payout ratio Times interest earned and payout ratio None
Answer:
Times interest earned and Payout Ratio
Question:
Horizontal analysis compares the components of a balance sheet with a base item. T/F
Answer:
False
Question:
Since companies have different numbers of shares outstanding, it is not useful to compare earnings
per share ratios. T/F
Answer:
True
Question:
There are two ratios that help define the operating cycle. They are: receivables and inventory
turnover receivables and accounts payable inventory and accounts payable turnover none of these
Answer:
Receivables and accounts payable
Question:
,The ratio that shows the markup in price over the cost of goods sold is profit margins gross margin
ratio return on assets asset turnover none
Answer:
Gross margin ratio
Question:
The ratio that shows how investors value the stock is payout ratio earnings per share return on equity
return on assets none
Answer:
None
Question:
Financial strength ratios are utilized to help predict the long-run solvency of a company. T/F
Answer:
True
Question:
Ratio analysis is popular because ratios: summarize important info are useful in comparisons within
a company over time are useful in comparisons with other companies all the above
Answer:
All the above
Question:
ROE shows how much income was earned for every dollar invested by owners. T/F
Answer:
True
, Question:
A company's annual report is used primarily by the taxing authorities. T/F
Answer:
True
Question:
Managerial accounting is involved in: external reports internal reports tax reports economic reports
Answer:
Internal reports
Question:
Using an accelerated depreciation method for tax purposes would be an example of: managerial
accounting financial accounting tax accounting none
Answer:
Tax accounting
Question:
Owners in corporations are liable only for the amount they have invested and no more. T/F
Answer:
True
Question:
Information that can make a difference to the decision at hand is considered to be: reliable
comparable conservatism understandability none
Answer:
None - relevancy
