FINA 3770 EXAM 2 2025/2026 QUESTIONS
AND ANSWERS 100% PASS
Common-sized balance sheets - ANS show each balance sheet account as a percentage of
total assets
financial analysis - ANS 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? -
ANS 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... - ANS (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... -
ANS 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... - ANS 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... - ANS a firm's liquidity
position
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, the acid-test ratio of a firm would be unaffected by which of the following... - ANS accounts
payable are reduced by obtaining a short-term loan
the current ratio of a firm would equal its quick ratio whenever... - ANS 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? - ANS $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? - ANS $96/share
E=800,000/100,000=8
P=(P/E)*E = 12*8
when comparing inventory turnover ratios, other things being equal... - ANS 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? - ANS 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? -
ANS negotiate a new contract that lowers raw material costs by 10%
common-sized income statements... - ANS assist in the comparison of companies of different
sizes
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
AND ANSWERS 100% PASS
Common-sized balance sheets - ANS show each balance sheet account as a percentage of
total assets
financial analysis - ANS 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? -
ANS 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... - ANS (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... -
ANS 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... - ANS 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... - ANS a firm's liquidity
position
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, the acid-test ratio of a firm would be unaffected by which of the following... - ANS accounts
payable are reduced by obtaining a short-term loan
the current ratio of a firm would equal its quick ratio whenever... - ANS 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? - ANS $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? - ANS $96/share
E=800,000/100,000=8
P=(P/E)*E = 12*8
when comparing inventory turnover ratios, other things being equal... - ANS 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? - ANS 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? -
ANS negotiate a new contract that lowers raw material costs by 10%
common-sized income statements... - ANS assist in the comparison of companies of different
sizes
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
