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8) In examining the liquidity ratios, the primary emphasis

Customer Question
is the firm's A...
8) In examining the liquidity ratios, the primary emphasis is the firm's
A. ability to effectively employ its resources.
B. ability to earn an adequate return.
C. ability to pay short-term obligations on time.
D. overall debt position.



9) A quick ratio that is much smaller than the current ratio reflects
A. a small portion of current assets is in inventory.
B. that the firm will have a high return on assets.
C. that the firm will have a high inventory turnover.
D. a large portion of current assets is in inventory.

14) In order to estimate production requirements, we
A. add projected sales in units to desired ending inventory and subtract beginning inventory.
B. add beginning inventory to desired ending inventory and divide by two.
C. add beginning inventory to projected sales in units and subtract desired ending inventory.
D. add beginning inventory to desired ending inventory and subtract projected sales in units.
Submitted: 8 years ago.Category: Finance
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Answered in 2 minutes by:
5/10/2009
Financial Professional: Amol Srivastava, Accountant replied 8 years ago
Amol Srivastava
Amol Srivastava, Accountant
Category: Finance
Satisfied Customers: 626
Experience: More than 4years + of industry experience ,CFA level2 cleared, Chartered Accountant from India
Verified
8 - C
9 -D
14 - A
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Customer reply replied 8 years ago
Hello Amol I have several more questions I need help with, can you help? I will gladly pay more.
Financial Professional: Amol Srivastava, Accountant replied 8 years ago
Sure go ahead
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Customer reply replied 8 years ago
16) The key initial element in developing pro forma statements is
A.an income statement.
B.a sales forecast.
C.a cash budget.
D.a collections schedule.
17) In developing the pro forma income statement we follow four important steps:
1) compute other expenses,
2) determine a production schedule,
3) establish a sales projection,
4) determine profit by completing the actual pro forma statement.

What is the correct order for these four steps?
A.3,2,4,1
B.2,1,3,4
C.1,2,3,4
D.3,2,1,4
19) When a firm employs no debt
A.it has a financial leverage of zero.
B.its operating leverage is equal to its financial leverage.
C.it has a financial leverage of one.
D.it will not be profitable.
20) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.
A.variable costs
B.marginal costs
C.fixed costs
D.semi-variable costs
25) When the yield curve is upward sloping, generally a financial manager should:
A.utilize short-term financing
B.wait for future financing
C.utilize long-term financing
D.lease
28) Risk exposure due to heavy short-term borrowing can be compensated for by
A.carrying illiquid assets.
B.carrying longer term, more profitable current assets.
C.carrying more receivables to increase cash flow.
D.carrying highly liquid assets.
29) An aggressive working capital policy would have which of following characteristics?
A.A low ratio of short-term debt to fixed assets.
B.A high ratio of short-term debt to long-term sources of funds.
C.A short average collection period.
D.A high ratio of long-term debt to fixed assets.
30) Which of the following combinations of asset structures and financing patterns is likely to create the least volatile earnings?
A.Illiquid assets and heavy long-term borrowing
B.Liquid assets and heavy long-term borrowing
C.Liquid assets and heavy short-term borrowing
D.Illiquid assets and heavy short-term borrowing
31) Which of the following is not a valid reason for holding cash?
A.to earn the highest return possible
B.to satisfy emergency needs for funds
C.to provide a compensating balance for a bank
D.to meet transaction requirements
36) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?
A.The age of the company, the number of employees, the level of current assets.
B.The financial statements, satisfactory or slow payment experiences, negative public records (suits, liens, judgments, bankruptcies).
C.The company's cash balances, return on equity, and its average tax rates.
D.The age of the management team, the dollar amount of sales, net profits, and long-term debt.
37) Which of the following is not a method for lenders to control pledged inventory?
A.Trust receipts
B.Warehousing
C.Factoring
D.Blanket inventory liens
38) Large firms tend to be
A.net suppliers of trade credit.
B.firms with high levels of profitability.
C.firms with low levels of inventory turnover and accounts receivable turnover.
D.net users of trade credit.
40) Which method of controlling pledged inventory provides the greatest degree of security to the lender?
A.Overall inventory liens
B.Trust receipts
C.Warehousing
D.Blanket inventory liens
41) Trade credit may be used to finance a major part of the firm's working capital when
A.the firm extends more liberal credit terms than the supplier.
B.the firm and the supplier both extend the same credit terms.
C.neither the firm nor the supplier extends credit.
D.the firm extends less liberal credit terms than the supplier.
42) A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of its customers?
A.Increased receivables and increased bank loans
B.Increased payables and decreased bank loans
C.Decreased receivables and increased bank loans
D.Increased payables and increased bank loans
46) The future value of a $1000 investment today at 8 percent annual interest compounded semiannually for 5 years is
A.$1,480
B.$1,520
C.$1,469
D.$1,555
47) If you invest $8,000 at 12% interest, how much will you have in 7 years?
A.$17,688
B.$3616
C.$18,016
D.$80,712
48) John Doeber borrowed $125,000 to buy a house. His loan cost was 11% and he promised to repay the loan in 15 equal annual payments. How much are the annual payments?
A.$9,250
B.$13,113
C.$3,633
D.$17,383
Financial Professional: Amol Srivastava, Accountant replied 8 years ago
Here you go:

16 B
17 D
19 C
20 C
25 A
28 D
29 A
30 C
31 A
36 D
37 C
38 A
40 C
41 D
42 A
46 A
47 A
48 D
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Customer reply replied 8 years ago

Awesome. I have six more if you don't mind.

Refer to the figure above. Megaframe's current ratio is
A.1.625:1
B.1.5:1
C.1.9:1
D.3.2:1
11) A firm's long term assets = $75,000, total assets = $200,000, inventory = $25,000 and current liabilities = $50,000.
A.current ratio = 1.0; quick ratio = 2.0
B.current ratio = 1.5; quick ratio = 2.0
C.current ratio = 0.5; quick ratio = 1.5
D.current ratio = 2.5; quick ratio = 2.0

Refer to the figure above. The firm's fixed asset turnover ratio is
A.1.5x.
B.2x.
C.3.1x.
D.0.1x.

Refer to the figure above. This firm's break-even point is
A.14,634 units
B.7,142 units
C.4,800 units
D.18,000 units
23) A firm's break-even point will rise if
A.contribution margins increase
B.price per unit rises
C.fixed costs decrease
D.variable cost per unit rises
24) The break-even point can be calculated as
A.total costs divided by contribution margin.
B.variable cost times contribution margin.
C.variable costs divided by contribution margin.
D.fixed cost divided by contribution margin.

Financial Professional: Amol Srivastava, Accountant replied 8 years ago
10 C
11 D
12 C
13 A
23 D
24 D
Amol Srivastava
Amol Srivastava, Accountant
Category: Finance
Satisfied Customers: 626
Experience: More than 4years + of industry experience ,CFA level2 cleared, Chartered Accountant from India
Verified
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Customer reply replied 8 years ago
Thank You so much Amol. Your were a great help.
Financial Professional: Amol Srivastava, Accountant replied 8 years ago
No problem at all.

In future if want to direct your questions to me you can mention Amol in front of your posts.
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Amol Srivastava
Amol Srivastava
Amol Srivastava, Accountant
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Satisfied Customers: 626
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