FINA 3770 Exam 2 Questions and Answers Latest Update 2025-2026
common-sized balance sheets - Answers show each balance sheet account as a percentage of
total assets
financial analysis - Answers uses historical financial statements to measure a company's
performance and in making financial projections of future performance
in an ideal world, which of the following would be used to evaluate firm performance? - Answers
market value of assets
williams inc. has a current ratio equal to 3, a quick ratio equal to 1.8, and total current assets of
$6 million. williams inventory balance is... - Answers (show work..) $2,400,000
nelson industries has a higher debt ratio that butler inc, and nelson also has a high times
interest earned ratio. if nelson and butler both have the same amount of total assets, then... -
Answers nelson may have more non-interest bearing liabilities, such as accounts payable, than
butler has
all of the following will improve a firm's liquidity position EXCEPT... - Answers increase the avg
collection period
increase inventory turnover, increase long-term debt and invest the money in marketable
securities, and increase accounts receivable turnover all improve... - Answers a firm's liquidity
position
the acid-test ratio of a firm would be unaffected by which of the following... - Answers accounts
payable are reduced by obtaining a short-term loan
the current ratio of a firm would equal its quick ratio whenever... - Answers the firm's has no
inventory
Baker Corp. is required by a debt agreement to maintain a current ratio of at least 2.5, and
Baker's current ratio now is 3. Baker wants to purchase additional inventory with short-term debt.
How much inventory can Baker purchase without violating its debt agreement if their total
current assets equal $15 million? - Answers $1.67 million
benkart corp has sales of $5,000,000, net income of $800,000, total assets of $2,000,000, and
100,000 shares of common stock outstanding. if benkart's P/E ratio is 12, what is the
company's current stock price? - Answers $96/share
E=800,000/100,000=8
P=(P/E)*E = 12*8
when comparing inventory turnover ratios, other things being equal... - Answers a higher
inventory turnover is preferred to improve liquidity
, jones inc. has a current ratio equal to 1.40. which of the following transactions will increase the
company's current ratio? - Answers the company writes a $30,000 check to pay off some
existing accounts payable
which of the following transactions will increase a corporation's operating return on assets? -
Answers negotiate a new contract that lowers raw material costs by 10%
common-sized income statements... - Answers assist in the comparison of companies of
different sizes
based on the information, the accounts receivable turnover is... - Answers credit
sales(10,000,000)/accts receivable(900,000)=
11.11
based on the information, the current ratio is... - Answers current assets(3,075,000)/current
liabilities(1,550,000) = 1.98
based on the information, the total asset turnover is... - Answers sales(10,000,000)/total
assets(9,000,000) = 1.11
based on the information, and assuming the company's stock price is $30/share, the P/E ratio
is... - Answers E= 2730000(aka net income)/1000000= 2.73
30/2.73=10.49 aka closest answer = 10.99
based on the information, the times interest earned ratio is... - Answers [net sales(10,000,000)-
cogs(3,000,000)-depreciation(250,000)]/interest expense(200,000) = 23.75
based on the information, the fixed asset turnover ratio is... - Answers sales(10,000,000)/net
fixed assets(5,925,000) = 1.69
based on the information, the avg collection period is... - Answers acct
receivable(900,000)/[annual credit sales(10,000,000)/365] = 32.85 days
based on the information, the debt ratio is... - Answers total debt(?)/total assets (9,000,000)=
45%
based on the information, the OROA is... - Answers total asset turnover: sales(10,000,000)/total
assets(9,000,000)=1.11 multiplied by operating profit margin: operating profit(aka earnings
before tax: 4,550,000)/sales(10,000,000)= .46
.46*1.11= .51 which is approximately = 52.78%
based on the information, the acid-test ratio is... - Answers (cash(600,000) + acct
receivable(900,000))/ current liabilities(1,550,000) = 1.02
common-sized balance sheets - Answers show each balance sheet account as a percentage of
total assets
financial analysis - Answers uses historical financial statements to measure a company's
performance and in making financial projections of future performance
in an ideal world, which of the following would be used to evaluate firm performance? - Answers
market value of assets
williams inc. has a current ratio equal to 3, a quick ratio equal to 1.8, and total current assets of
$6 million. williams inventory balance is... - Answers (show work..) $2,400,000
nelson industries has a higher debt ratio that butler inc, and nelson also has a high times
interest earned ratio. if nelson and butler both have the same amount of total assets, then... -
Answers nelson may have more non-interest bearing liabilities, such as accounts payable, than
butler has
all of the following will improve a firm's liquidity position EXCEPT... - Answers increase the avg
collection period
increase inventory turnover, increase long-term debt and invest the money in marketable
securities, and increase accounts receivable turnover all improve... - Answers a firm's liquidity
position
the acid-test ratio of a firm would be unaffected by which of the following... - Answers accounts
payable are reduced by obtaining a short-term loan
the current ratio of a firm would equal its quick ratio whenever... - Answers the firm's has no
inventory
Baker Corp. is required by a debt agreement to maintain a current ratio of at least 2.5, and
Baker's current ratio now is 3. Baker wants to purchase additional inventory with short-term debt.
How much inventory can Baker purchase without violating its debt agreement if their total
current assets equal $15 million? - Answers $1.67 million
benkart corp has sales of $5,000,000, net income of $800,000, total assets of $2,000,000, and
100,000 shares of common stock outstanding. if benkart's P/E ratio is 12, what is the
company's current stock price? - Answers $96/share
E=800,000/100,000=8
P=(P/E)*E = 12*8
when comparing inventory turnover ratios, other things being equal... - Answers a higher
inventory turnover is preferred to improve liquidity
, jones inc. has a current ratio equal to 1.40. which of the following transactions will increase the
company's current ratio? - Answers the company writes a $30,000 check to pay off some
existing accounts payable
which of the following transactions will increase a corporation's operating return on assets? -
Answers negotiate a new contract that lowers raw material costs by 10%
common-sized income statements... - Answers assist in the comparison of companies of
different sizes
based on the information, the accounts receivable turnover is... - Answers credit
sales(10,000,000)/accts receivable(900,000)=
11.11
based on the information, the current ratio is... - Answers current assets(3,075,000)/current
liabilities(1,550,000) = 1.98
based on the information, the total asset turnover is... - Answers sales(10,000,000)/total
assets(9,000,000) = 1.11
based on the information, and assuming the company's stock price is $30/share, the P/E ratio
is... - Answers E= 2730000(aka net income)/1000000= 2.73
30/2.73=10.49 aka closest answer = 10.99
based on the information, the times interest earned ratio is... - Answers [net sales(10,000,000)-
cogs(3,000,000)-depreciation(250,000)]/interest expense(200,000) = 23.75
based on the information, the fixed asset turnover ratio is... - Answers sales(10,000,000)/net
fixed assets(5,925,000) = 1.69
based on the information, the avg collection period is... - Answers acct
receivable(900,000)/[annual credit sales(10,000,000)/365] = 32.85 days
based on the information, the debt ratio is... - Answers total debt(?)/total assets (9,000,000)=
45%
based on the information, the OROA is... - Answers total asset turnover: sales(10,000,000)/total
assets(9,000,000)=1.11 multiplied by operating profit margin: operating profit(aka earnings
before tax: 4,550,000)/sales(10,000,000)= .46
.46*1.11= .51 which is approximately = 52.78%
based on the information, the acid-test ratio is... - Answers (cash(600,000) + acct
receivable(900,000))/ current liabilities(1,550,000) = 1.02
