Business Finance - Peregrine Section Review Questions and answers

Business Finance - Peregrine Section Review |\ |\ |\ |\ |\ |\




Questions and answers |\ |\




A company's balance sheet shows the value of assets, liabilities,
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and stockholders' equity _____.
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A. for any given period of time
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B. at a specific point in time
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C. at the end of the fiscal year - CORRECT ANSWERS ✔✔B. at a
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specific point in time |\ |\ |\




Match the ratios to their ratio type.
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A. Debt Ratios
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B. Activity Ratios
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C. Market Ratios
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D. Liquidity Ratios
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E. Profitability Ratios
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Current Ratio & Quick (Acid Test) Ratio
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Turnover ratios & Collection/Payment Period
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Debt-to-Equity Ratio & Times Interest Earned (TIE) |\ |\ |\ |\ |\ |\

,Profit Margin & Return on Assets
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Price/Earnings (P/E) Ratio & Market-to-Book Ratio - CORRECT |\ |\ |\ |\ |\ |\ |\ |\



ANSWERS ✔✔A. Debt Ratios: Debt-to-Equity Ratio & Times Interest
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Earned (TIE)
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B. Activity Ratios: Turnover ratios & Collection/Payment Period
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C. Market Ratios: Price/Earnings (P/E) Ratio & Market-to-Book Ratio
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D. Liquidity Ratios: Current Ratio & Quick (Acid Test) Ratio
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E. Profitability Ratios: Profit Margin & Return on Assets
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Balance Sheet Assets - CORRECT ANSWERS ✔✔Cash and cash
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equivalents are assets such as checking account balances at
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commercial banks that can be used directly as means of payment.
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Marketable securities represent liquid short-term investments,
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which financial analysts view as a form of "near cash." They
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include Treasury notes, commercial paper, and others.
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Accounts receivable represent the amount customers owe the firm
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from sales made on credit.
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Inventories include raw materials, work in process (partially
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finished goods), and finished goods held by the firm.
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, Intangible assets include items such as patents, trademarks, |\ |\ |\ |\ |\ |\ |\ |\



copyrights, or mineral rights entitling the company to extract oil |\ |\ |\ |\ |\ |\ |\ |\ |\ |\



and gas on specific properties.
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Gross property, plant, and equipment (PP&E) is the original cost of
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all real property, structures, and long-lived equipment owned by
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the firm. |\




Net property, plant, and equipment is calculated as Gross PP&E
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less accumulated depreciation - the cumulative expense recorded
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for the depreciation of fixed assets since their purchase; this
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reflects a decline in the asset's economic value over time. The one
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fixed asset that is not depreciated is land because it seldom
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declines in value. |\ |\




Match the flow to its descriptor |\ |\ |\ |\ |\




A. Investment Flows
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B. Operating Flows
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C. Financing Flows
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Cash inflows and outflows directly related to production and sale
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of products or services
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Cash flows associated with the purchase or sale of fixed assets and
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business equity
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