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标题: Reading 35: Financial Analysis Techniques-LOS d 习题精选 [打印本页]
作者: 1215    时间: 2011-3-16 16:18     标题: [2011]Session 8-Reading 35: Financial Analysis Techniques-LOS d 习题精选

Session 8: Financial Reporting and Analysis: The Income Statement, Balance Sheet, and Cash Flow Statement
Reading 35: Financial Analysis Techniques

LOS d: Calculate, classify, and interpret activity, liquidity, solvency, profitability, and valuation ratios.

 

 

Given the following income statement and balance sheet for a company:

Balance Sheet

Assets Year 2003 Year 2004
Cash 500 450
Accounts Receivable 600 660
Inventory 500 550
Total CA 1300 1660
Plant, prop. equip 1000 1250
Total Assets 2600 2910
Liabilities
Accounts Payable 500 550
Long term debt 700 1102
Total liabilities 1200 1652
Equity
Common Stock 400 538
Retained Earnings 1000 720
Total Liabilities & Equity 2600 2910

Income Statement

Sales 3000
Cost of Goods Sold (1000)
Gross Profit 2000
SG&A 500
Interest Expense 151
EBT 1349
Taxes (30%) 405
Net Income 944

What is the quick ratio for 2004?

A)
 3.018.
B)
 2.018.
C)
 0.331.

 

Quick ratio = (cash + marketable securities + receivables) / CL = (450 + 0 + 660) / 550 = 2.018

作者: 1215    时间: 2011-3-16 16:18

Given the following income statement and balance sheet for a company:

Balance Sheet

Assets Year 2003 Year 2004
Cash 500 450
Accounts Receivable 600 660
Inventory 500 550
Total CA 1600 1660
Plant, prop. equip 1000 1250
Total Assets 2600 2910
Liabilities
Accounts Payable 500 550
Long term debt 700 1002
Total liabilities 1200 1552
Equity
Common Stock 400 538
Retained Earnings 1000 820
Total Liabilities & Equity 2600 2910

Income Statement

Sales 3000
Cost of Goods Sold (1000)
Gross Profit 2000
SG&A (500)
Interest Expense (151)
EBT 1349
Taxes (30%) (405)
Net Income 944

What is the current ratio for 2004?

A)
 0.331.
B)
 2.018.
C)
 3.018.

Current ratio = (CA / CL) = (1,660 / 550) = 3.018

作者: 1215    时间: 2011-3-16 16:19

Which of the following is least likely a routinely used operating profitability ratio?

A)
 Sales/Total Assets
B)
 Net income/net sales.
C)
 Gross profit/net sales.

Sales/Total Assets, or Total Asset Turnover is a measure of operating efficiency, not operating profitability.

作者: 1215    时间: 2011-3-16 16:19

As of December 31, 2007, Manhattan Corporation had a quick ratio of 2.0, current assets of $15 million, trade payables of $2.5 million, and receivables of $3 million, and inventory of $6 million. How much were Manhattan’s current liabilities?

A)
 $4.5 million.
B)
 $12.0 million.
C)
 $7.5 million.

Manhattan’s quick assets were equal to $9 million ($15 million current assets – $6 million inventory). Given a quick ratio of 2.0, quick assets were twice the current liabilities. Thus, the current liabilities must have been $4.5 million ($9 million quick assets / 2.0 quick ratio).

作者: 1215    时间: 2011-3-16 16:19

Which of the following ratios would least likely measure liquidity?

A)
 Return on assets (ROA).
B)
 Quick ratio.
C)
 Current ratio.

ROA = (EBIT / average total assets) which measures management's ability and efficiency in using the firm's assets to generate operating profits. Other ratios that measure liquidity (if a company can pay its current bills) besides the quick, cash, and current ratios are the: receivables turnover, inventory turnover, and payables turnover ratios.

作者: 1215    时间: 2011-3-16 16:19

Are the following ratios best classified as profitability ratios?

Ratio #1 – Cash plus short-term marketable investments plus receivables divided by average daily cash expenditures.

Ratio #2 – Earnings before interest and taxes divided by average total assets.

A)
 Only one of the ratios is a profitability ratio.
B)
 Both of the ratios are profitability ratios.
C)
 Neither of the ratios is a profitability ratio.

(Cash + short-term marketable investments + receivables) divided by average daily cash expenditures is known as the defensive interval ratio. The defensive interval ratio is a liquidity ratio that measures the firm’s ability to pay cash expenditures in the absence of external cash flows, but does not directly measure profitability. EBIT / average total assets is one variation of the return on assets ratio. Return on assets is a profitability ratio that measures the efficiency of managing assets and generating profits.

作者: 1215    时间: 2011-3-16 16:21

Given the following income statement and balance sheet for a company:

Balance Sheet

Assets Year 2003 Year 2004
Cash 500 450
Accounts Receivable 600 660
Inventory 500 550
Total CA 1300 1660
Plant, prop. equip 1000 1250
Total Assets 2600 2910
Liabilities
Accounts Payable 500 550
Long term debt 700 1102
Total liabilities 1200 1652
Equity
Common Stock 400 538
Retained Earnings 1000 720
Total Liabilities & Equity 2600 2,910

Income Statement

Sales 3000
Cost of Goods Sold (1000)
Gross Profit 2000
SG&A 500
Interest Expense 151
EBT 1349
Taxes (30%) 405
Net Income 944

What is the gross profit margin?

A)
 0.666.
B)
 0.333.
C)
 0.472.

Gross profit margin = (gross profit / net sales) = (2,000 / 3,000) = 0.666

作者: 1215    时间: 2011-3-16 16:21

Given the following information about a firm:

What are the gross and operating profit margins?

Gross Operating Margin Operating Profit Margin

A)
40% 20%
B)
40% 10%
C)
20% 15%

Gross profit margin = ($1,000 net sales ? $600 COGS) / $1,000 net sales = 400 / 1,000 = 0.4

Operating profit margin = ($1,000 net sales ? $600 COGS ? $200 operating expenses) / $1,000 net sales = $200 / $1000 = 0.2

作者: 1215    时间: 2011-3-16 16:21

An analyst gathered the following data about a company:

If the company would like a current ratio of 2, they could:

A)
 decrease current assets by 100 or increase current liabilities by 50.
B)
 increase current assets by 100 or decrease current liabilities by 50.
C)
 increase current assets by 100 or increase current liabilities by 50.

For the current ratio to equal 2.0, current assets would need to move to $600 (or up by $100) or current liabilities would need to decrease to $250 (or down by $50). Remember that CA ? CL = working capital (500 ? 300 = 200).

作者: 1215    时间: 2011-3-16 16:21

An analyst has gathered the following information about a company:

Balance Sheet

Assets
Cash 100
Accounts Receivable 750
Marketable Securities 300
Inventory 850
Property, Plant & Equip 900
Accumulated Depreciation (150)
Total Assets 2750
Liabilities and Equity
Accounts Payable 300
Short-Term Debt 130
Long-Term Debt 700
Common Stock 1000
Retained Earnings 620
Total Liab. and Stockholder's equity 2750

Income Statement

Sales 1500
COGS 1100
Gross Profit 400
SG&A 150
Operating Profit 250
Interest Expense 25
Taxes 75
Net Income 150

What is the current ratio?

A)
 2.67.
B)
 0.22.
C)
 4.65.

Current ratio = [100(cash) + 750(AR) + 300(marketable securities) + 850(inventory)] / [300(AP) + 130(short-term debt)] = (2,000 / 430) = 4.65

作者: 1215    时间: 2011-3-16 16:22

Wells Incorporated reported the following common size data for the year ended December 31, 20X7:

Income Statement %
Sales 100.0
Cost of goods sold 58.2
Operating expenses 30.2
Interest expense 0.7
Income tax 5.7
Net income 5.2

Balance sheet % %
Cash 4.8 Accounts payable 15.0
Accounts receivable 14.9 Accrued liabilities 13.8
Inventory 49.4 Long-term debt 23.2
Net fixed assets 30.9 Common equity 48.0
Total assets 100.00 Total liabilities & equity 100.0

For 20X6, Wells reported sales of $183,100,000 and for 20X7, sales of $215,600,000. At the end of 20X6, Wells’ total assets were $75,900,000 and common equity was $37,800,000. At the end of 20X7, total assets were $95,300,000. Calculate Wells’ current ratio and return on equity ratio for 20X7.

Current ratio Return on equity

A)
2.4 26.4%
B)
2.4 26.8%
C)
4.6 25.2%

The current ratio is equal to 2.4 [(4.8% cash + 14.9% accounts receivable + 49.4% inventory) / (15.0% accounts payable + 13.8% accrued liabilities)]. This ratio can be calculated from the common size balance sheet because the percentages are all on the same base amount (total).

Return on equity is equal to net income divided by average total equity. Since this ratio mixes an income statement item and a balance sheet item, it is necessary to convert the common-size inputs to dollars. Net income is $11,211,200 ($215,600,000 × 5.2%) and average equity is $41,772,000 [($95,300,000 × 48.0%) + $37,800,000] / 2. Thus, 2007 ROE is 26.8% ($11,211,200 net income / $41,772,000 average equity).

作者: 1215    时间: 2011-3-16 16:22

To calculate the cash ratio, the total of cash and marketable securities is divided by:

A)
 total liabilities.
B)
 current liabilities.
C)
 total assets.

Current liabilities are used in the denominator for the: current, quick, and cash ratios.

作者: 1215    时间: 2011-3-16 16:22

Earnings before interest and taxes (EBIT) is also known as:

A)
 gross profit.
B)
 operating profit.
C)
 earnings before income taxes.

Operating profit = earnings before interest and taxes (EBIT)

Gross profit = net sales – COGS

Net income = earnings after taxes = EAT

作者: 1215    时间: 2011-3-16 16:23

A company has a receivables turnover of 10, an inventory turnover of 5, and a payables turnover of 12. The company’s cash conversion cycle is closest to:

A)
 79 days.
B)
 30 days.
C)
 37 days.

Cash conversion cycle = receivables days + inventory processing days – payables payment period.
Receivables days = 365 / receivables turnover = 365 / 10 = 36.5 days.
Inventory processing days = 365 / inventory turnover = 365 / 5 = 73.0 days.
Payables payment period = 365 / payables turnover = 365 / 12 = 30.4 days.
Cash collection cycle = 36.5 + 73.0 – 30.4 = 79.1 days.

作者: 1215    时间: 2011-3-16 16:23

An analyst has gathered the following information about a firm:

What is this firm’s operating profit margin?

A)
 18%.
B)
 50%.
C)
 30%.

Operating profit margin = (EBIT / net sales) = ($150,000 / $500,000) = 30%

作者: 1215    时间: 2011-3-16 16:23

Use the following data from Delta's common size financial statement to answer the question:

Earnings after taxes = 18%
Equity = 40%
Current assets = 60%
Current liabilities = 30%
Sales = $300
Total assets = $1,400

What is Delta's after-tax return on equity?

A)
 18.0%.
B)
 5.0%.
C)
 9.6%.

Net income after taxes = 300 × 0.18 = 54
Equity = 1400 × 0.40 = 560
ROE = Net Income / Equity = 54 / 560 = 0.0964 = 9.6%

作者: 1215    时间: 2011-3-16 16:23

A firm has a cash conversion cycle of 80 days. The firm's payables turnover goes from 11 to 12, what happens to the firm's cash conversion cycle? It:

A)
 shortens.
B)
 may shorten or lengthen.
C)
 lengthens.

CCC = collection period + Inv Period – Payment period.

Payment period = (365 / payables turnover) = (365 / 11) = 33; (365 / 12) = 30. This means the CCC actually increased to 83.

作者: 1215    时间: 2011-3-16 16:23

Paragon Company's operating profits are $100,000, interest expense is $25,000, and earnings before taxes are $75,000. What is Paragon's interest coverage ratio?

A)
 1 time.
B)
 3 times.
C)
 4 times.

ICR = operating profit ÷ I = EBIT ÷ I
= 100,000 ÷ 25000 = 4

作者: 1215    时间: 2011-3-16 16:24

Assume a firm with a debt to equity ratio of 0.50 and debt equal to $35 million makes a commitment to acquire raw materials with a present value of $12 million over the next 3 years. For purposes of analysis the best estimate of the debt to equity ratio should be:

A)
 0.671.
B)
 0.500.
C)
 0.573.

The original debt / equity ratio = 35 / 70 = 0.5. Now adjust the numerator but not the denominator. Why? You have commitments (liabilities) but no new equity because (non-current) liabilities and assets are increased by the same amount. D/E = (35 + 12) / 70 = 0.671.

作者: 1215    时间: 2011-3-16 16:24

Given the following income statement and balance sheet for a company:

Balance Sheet

Assets Year 2003 Year 2004
Cash 500 450
Accounts Receivable 600 660
Inventory 500 550
Total CA 1300 1660
Plant, prop. equip 1000 1250
Total Assets 2600 2910
Liabilities
Accounts Payable 500 550
Long term debt 700 700
Total liabilities 1200 1652
Equity
Common Stock 400 400
Retained Earnings 1260 1260
Total Liabilities & Equity 2600 2910

Income Statement

Sales 3000
Cost of Goods Sold (1000)
Gross Profit 2000
SG&A 500
Interest Expense 151
EBT 1349
Taxes (30%) 405
Net Income 944

What is the operating profit margin?

A)
 0.45.
B)
 0.67.
C)
 0.50.

Operating profit margin = (EBIT / sales) = (1,500 / 3,000) = 0.5

作者: 1215    时间: 2011-3-16 16:24

An analyst has collected the following data about a firm:

What is the cash conversion cycle?

A)
 Not enough information is given.
B)
 26 days.
C)
 56 days.

Cash conversion cycle = receivables collection period + inventory processing period – payables payment period.

Receivables collection period = (365 / 20) = 18
Inventory processing period = (365 / 16) = 23
Payables payment period = (365 / 24) = 15
Cash conversion cycle = 18 + 23 – 15 = 26

作者: 1215    时间: 2011-3-16 16:25

Which of the following items is NOT in the numerator of the quick ratio?

A)
 Inventory.
B)
 Cash.
C)
 Receivables.

Quick ratio = (cash + marketable securities + receivables) / current liabilities

Current ratio = (cash + marketable securities + receivables + inventory) / current liabilities

作者: 1215    时间: 2011-3-16 16:25

If the inventory turnover ratio is 7, what is the average number of days the inventory is in stock?

A)
 70 days.
B)
 52 days.
C)
 25 days.

Average Inventory Processing Period = 365 / inventory turnover = 365 / 7 = 52 days.

作者: 1215    时间: 2011-3-16 16:25

Using a 365-day year, if a firm has net annual sales of $250,000 and average receivables of $150,000, what is its average collection period?

A)
 219.0 days.
B)
 1.7 days.
C)
 46.5 days.

Receivables turnover = $250,000 / $150,000 = 1.66667

Collection period = 365 / 1.66667 = 219 days

作者: 1215    时间: 2011-3-16 16:25

Goldstar Manufacturing has an accounts receivable turnover of 10.5 times, an inventory turnover of 4 times, and payables turnover of 8 times. What is Goldstar’s cash conversion cycle?

A)
 6.50 days.
B)
 80.38 days.
C)
 171.64 days.

The cash conversion cycle = average receivables collection period + average inventory processing period – payables payment period. The average receivables collection period = 365 / average receivables turnover or 365 / 10.5 = 34.76. The average inventory processing period = 365 / inventory turnover or 365 / 4 = 91.25. The payables payment period = 365 / payables turnover ratio = 365 / 8 = 45.63. Putting it all together: cash conversion cycle = 34.76 + 91.25 – 45.63 = 80.38.

作者: 1215    时间: 2011-3-16 16:25

Given the following income statement:

Net Sales 200
Cost of Goods Sold 55
Gross Profit 145
Operating Expenses 30
Operating Profit (EBIT) 115
Interest 15
Earnings Before Taxes (EBT) 100
Taxes 40
Earnings After Taxes (EAT) 60

What are the gross profit margin and operating profit margin?

Gross Profit Margin Operating Profit Margin

A)
2.630 1.226
B)
0.725 0.575
C)
0.379 0.725

Gross profit margin = gross profit / net sales = 145 / 200 = 0.725

Operating profit margin = EBIT / net sales = 115 / 200 = 0.575




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