Corporate Finance Test Bank EXAM LATEST
UPDATED VERSION QUESTIONS AND VERIFIED
CORRECT ANSWERS JUST RELEASED
Which one of the following is most apt to cause a firm to have a higher price-earnings
ratio?
A. slow industry outlook
B. very low current earnings
C. low market share
D. low prospect of firm growth
E. low investor opinion of firm - answer>>>B
Vinnie's Motors has a market-to-book ratio of 3.4. The book value per share is $34 and
earnings per share are $1.36. Holding the market-to-book ratio and earnings per share
constant, a $1 increase in the book value per share will:
A. decrease the price-earnings ratio.
B. decrease the EV multiple.
C. decrease the market price per share.
D. increase the price-earnings ratio.
E. increase the return on equity. - answer>>>D
Which one of the following sets of ratios would generally be of the most interest to
stockholders?
A. return on assets and profit margin
,B. quick ratio and times interest earned
C. price-earnings ratio and debt-equity ratio
D. return on equity and price-earnings ratio
E. cash coverage ratio and equity multiplier - answer>>>D
The DuPont identity can be computed as:
A. Net income × Profit margin × (1 + Debt-equity ratio).
B. Profit margin × (1 / Capital intensity) × (1 + Debt-equity ratio).
C. Net income × Total asset turnover × Equity multiplier.
D. Profit margin × Total asset turnover × Debt-equity ratio.
E. Return on equity × Profit margin × Total asset turnover. - answer>>>B
If a firm decreases its operating costs, all else constant, then the:
A. profit margin will decrease.
B. return on assets will decrease.
C. total asset turnover rate will increase.
D. cash coverage ratio will decrease.
E. price-earnings ratio will decrease. - answer>>>E
It is easier to evaluate a firm using its financial statements when the firm:
A. is a conglomerate.
B. is global in nature.
C. uses the same accounting procedures as other firms in its industry.
D. has a different fiscal year than other firms in its industry.
, E. tends to have one-time events such as asset sales and property acquisitions. -
answer>>>C
The most effective method of directly evaluating the financial performance of a firm is to
compare the financial ratios of the firm to:
A. the firm's ratios from prior time periods and to the ratios of firms with similar
operations.
B. the average ratios of all firms within the same country over a period of time.
C. those of other firms located in the same geographic area that are similarly sized.
D. the average ratios of the firm's international peer group.
E. those of the largest conglomerate that has operations in the same industry as the firm.
- answer>>>A
In the financial planning model, the external financing needed (EFN) as shown on a pro
forma balance sheet is equal to the changes in assets:
A. plus the changes in liabilities minus the changes in equity.
B. minus the changes in both liabilities and equity.
C. minus the changes in liabilities.
D. plus the changes in both liabilities and equity.
E. minus the change in retained earnings. - answer>>>B
The least problem encountered when comparing the financial statements of one firm
with those of another firm occurs when the firms:
A. are in different lines of business.
B. have geographically diverse operations.
UPDATED VERSION QUESTIONS AND VERIFIED
CORRECT ANSWERS JUST RELEASED
Which one of the following is most apt to cause a firm to have a higher price-earnings
ratio?
A. slow industry outlook
B. very low current earnings
C. low market share
D. low prospect of firm growth
E. low investor opinion of firm - answer>>>B
Vinnie's Motors has a market-to-book ratio of 3.4. The book value per share is $34 and
earnings per share are $1.36. Holding the market-to-book ratio and earnings per share
constant, a $1 increase in the book value per share will:
A. decrease the price-earnings ratio.
B. decrease the EV multiple.
C. decrease the market price per share.
D. increase the price-earnings ratio.
E. increase the return on equity. - answer>>>D
Which one of the following sets of ratios would generally be of the most interest to
stockholders?
A. return on assets and profit margin
,B. quick ratio and times interest earned
C. price-earnings ratio and debt-equity ratio
D. return on equity and price-earnings ratio
E. cash coverage ratio and equity multiplier - answer>>>D
The DuPont identity can be computed as:
A. Net income × Profit margin × (1 + Debt-equity ratio).
B. Profit margin × (1 / Capital intensity) × (1 + Debt-equity ratio).
C. Net income × Total asset turnover × Equity multiplier.
D. Profit margin × Total asset turnover × Debt-equity ratio.
E. Return on equity × Profit margin × Total asset turnover. - answer>>>B
If a firm decreases its operating costs, all else constant, then the:
A. profit margin will decrease.
B. return on assets will decrease.
C. total asset turnover rate will increase.
D. cash coverage ratio will decrease.
E. price-earnings ratio will decrease. - answer>>>E
It is easier to evaluate a firm using its financial statements when the firm:
A. is a conglomerate.
B. is global in nature.
C. uses the same accounting procedures as other firms in its industry.
D. has a different fiscal year than other firms in its industry.
, E. tends to have one-time events such as asset sales and property acquisitions. -
answer>>>C
The most effective method of directly evaluating the financial performance of a firm is to
compare the financial ratios of the firm to:
A. the firm's ratios from prior time periods and to the ratios of firms with similar
operations.
B. the average ratios of all firms within the same country over a period of time.
C. those of other firms located in the same geographic area that are similarly sized.
D. the average ratios of the firm's international peer group.
E. those of the largest conglomerate that has operations in the same industry as the firm.
- answer>>>A
In the financial planning model, the external financing needed (EFN) as shown on a pro
forma balance sheet is equal to the changes in assets:
A. plus the changes in liabilities minus the changes in equity.
B. minus the changes in both liabilities and equity.
C. minus the changes in liabilities.
D. plus the changes in both liabilities and equity.
E. minus the change in retained earnings. - answer>>>B
The least problem encountered when comparing the financial statements of one firm
with those of another firm occurs when the firms:
A. are in different lines of business.
B. have geographically diverse operations.
