©Themoon EXAM SOLUTIONS
18/11/2024 17:20PM
Finance 3101 Keen Final Exam Questions
and Answers
What is meant by "benchmarking"? - Answers✓✓comparing a companies financial data to
another companies data or to its own previous data
What is the difference between Trend (time-series) and cross-section analysis? -
Answers✓✓trend: one company, multiple time periods
cross section: multiple companies, multiple time periods
How do we common-size the BS and IS and for what purpose? - Answers✓✓divide everything
by revenue or sales
What are some synonyms for "ratio" and what does EVERY ratio tell us? - Answers✓✓ratio =
fraction, proportion, percentage
Tells us "how many times the top is of the bottom"
What is the DuPont framework and what is it used for? - Answers✓✓A way of calculating ROE
using 3 different ratios.
The Dupont Framework is used to explain how companies can increase their return for
investors.
What does the Equity Multiplier represent? - Answers✓✓The use of debt (financial leverage)
, ©Themoon EXAM SOLUTIONS
16/11/2024 17:33PM
How does increased use of debt affect the cash coverage ratio and, ceteris paribus, a firm's ROE
(through the DuPont framework) - Answers✓✓More debit = Increase in ROE
True or False: Every ratio tells us for every one of what's on top, here's how many we have of
what's on the bottom - Answers✓✓False
True or False: Ratio, proportion, fraction, and percent all mean the same thing -
Answers✓✓True
True or False: if the debt-equity ratio is 1.25, the equity multiplier would be 2.50 -
Answers✓✓False
True or False: the higher the equity multiplier, the greater is the proportion of a firm's assets that
are financed with equity - Answers✓✓False
True or False: Common-size values on the balance sheet show each item as a percent of total
equity - Answers✓✓False
True or False: if sales increase by 5% and total assets fall by 1%, the TAT ratio would down by
approximately 6% - Answers✓✓False
True or False: a decrease in the current ratio indicates improvement in a firm's liquidity -
Answers✓✓False
True or False: an increase in the cash coverage ratio means that a firm is likely to default on its
outstanding debt - Answers✓✓True
True or False: Ceteris paribus, according to the DuPont framework, an increase in the use of
debt would increase a firm's ROE - Answers✓✓True
18/11/2024 17:20PM
Finance 3101 Keen Final Exam Questions
and Answers
What is meant by "benchmarking"? - Answers✓✓comparing a companies financial data to
another companies data or to its own previous data
What is the difference between Trend (time-series) and cross-section analysis? -
Answers✓✓trend: one company, multiple time periods
cross section: multiple companies, multiple time periods
How do we common-size the BS and IS and for what purpose? - Answers✓✓divide everything
by revenue or sales
What are some synonyms for "ratio" and what does EVERY ratio tell us? - Answers✓✓ratio =
fraction, proportion, percentage
Tells us "how many times the top is of the bottom"
What is the DuPont framework and what is it used for? - Answers✓✓A way of calculating ROE
using 3 different ratios.
The Dupont Framework is used to explain how companies can increase their return for
investors.
What does the Equity Multiplier represent? - Answers✓✓The use of debt (financial leverage)
, ©Themoon EXAM SOLUTIONS
16/11/2024 17:33PM
How does increased use of debt affect the cash coverage ratio and, ceteris paribus, a firm's ROE
(through the DuPont framework) - Answers✓✓More debit = Increase in ROE
True or False: Every ratio tells us for every one of what's on top, here's how many we have of
what's on the bottom - Answers✓✓False
True or False: Ratio, proportion, fraction, and percent all mean the same thing -
Answers✓✓True
True or False: if the debt-equity ratio is 1.25, the equity multiplier would be 2.50 -
Answers✓✓False
True or False: the higher the equity multiplier, the greater is the proportion of a firm's assets that
are financed with equity - Answers✓✓False
True or False: Common-size values on the balance sheet show each item as a percent of total
equity - Answers✓✓False
True or False: if sales increase by 5% and total assets fall by 1%, the TAT ratio would down by
approximately 6% - Answers✓✓False
True or False: a decrease in the current ratio indicates improvement in a firm's liquidity -
Answers✓✓False
True or False: an increase in the cash coverage ratio means that a firm is likely to default on its
outstanding debt - Answers✓✓True
True or False: Ceteris paribus, according to the DuPont framework, an increase in the use of
debt would increase a firm's ROE - Answers✓✓True
