Financial Management Chapter 3 Quiz

The sources and uses of cash over a stated period of time are reflected on the: - correct answer Statement of cash flows Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time? - correct answer Common-base year statement Which one of the following is a source of cash for a non-tax-paying firm? - correct answer Increase in common stock Which one of the following is a use of cash? - correct answer Decrease in accounts payable According to the statement of cash flows, an increase in inventory will _____ the cash flow from _____ activities. - correct answer Decrease; operating. Which of the following ratios are measures of a firm's liquidity? I. Cash coverage ratio. II. Interval measure. III. Debt-equity ratio. IV. Quick ratio. - correct answer II and IV only Which one of the following statements is correct? - correct answer An increase in the depreciation expense will not affect the cash coverage ratio If a firm produces a 13 percent return on assets and also a 13 percent return on equity, then the firm: - correct answer Has an equity multiplier of 1.0 The DuPont identity can be used to help managers answer which of the following questions related to a firm's operations? I. How many sales dollars has the firm generated per each dollar of assets? II. How many dollars of assets has a firm acquired per each dollar in shareholders' equity? III. How much net profit is a firm generating per dollar of sales? IV. Does the firm have the ability to meet its debt obligations in a timely manner? - correct answer I, II, and III only Barlow's Feed had the following current account values. What effect did the change in net working capital have on the firm's cash flows for the year? - correct answer Net source of cash of $101 Cash $15 Accounts receivable $65 Inventory 64 Accounts payable 87 Net source (use) of cash = $15 - 65 + 64 + 87 = $101 Flo's Flowers has accounts receivable of $4,511, inventory of $1,810, sales of $138,609, and cost of goods sold of $64,003. How many days does it take the firm to sell its inventory and collect the payment on the sale assuming that all sales are on credit? - correct answer 22.20 days Days in inventory = 365 / ($64,003 / $1,810) = 10.322 days Days' sa