Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 03 - Financial Analysis
3-41
Chapter 03 - Financial Analysis
106. Refer to the figure above. Compute Marni's after tax profit margin.
107. Refer to the figure above. Using the DuPont method, return on assets (investment) for
Marni is approximately
Chapter 03 - Financial Analysis
108. Refer to the figure above. The firm's return on equity is
109. Refer to the figure above. The firm's receivable turnover is
Chapter 03 - Financial Analysis
110. Refer to the figure above. The firm's average collection period is
111. Refer to the figure above. The firm's inventory turnover ratio is
Chapter 03 - Financial Analysis
112. Refer to the figure above. The firm's fixed asset turnover ratio is
113. Refer to the figure above. What is Marni's total asset turnover?
Chapter 03 - Financial Analysis
114. Refer to the figure above. Marni's quick ratio is
115. Refer to the figure above. Marni's current ratio is
Chapter 03 - Financial Analysis
116. Refer to the figure above. The firm's debt to asset ratio is
117. Refer to the figure above. Times interest earned for Marni Company is
Chapter 03 - Financial Analysis
3-48
118. Refer to the figure above. Fixed Charge coverage for Marni Company is
119. If Randolph Co. has sales of $3,000,000, net income of $200,000, and total asset
turnover of 1.5x, what is their ROA?
Chapter 03 - Financial Analysis
120. If Baxter Unlimited has annual sales of $5,000,000 (80% on credit), and receivables
equal to 35% of credit sales, what is their receivables turnover?
121. If Crossroads International has $3,000,000 in total sales (75% on credit) and receivables
of $500,000, what is their average collection period?
Chapter 03 - Financial Analysis
122. All of the following are common examples of possible distortion in reported income
except
123. Trend and industry analysis provide all of the following information except
124. If Turnpoint Inc. has net income of $400,000, assets of $5,000,000, sales of $2,000,000,
and debt of 2,000,000, what is their ROE?
Chapter 03 - Financial Analysis
125. Match the following with the items below:
profits.
patterns.
1. DuPont System of
A system of including inventory into cost of goods
sold in which the items purchased last are written off
A phantom source of profit that can mislead even
A result of an inflationary economy in which old
A method of study that breaks down return on
Ratios that measure the speed at which the firm is
6. debt utilization
Ratios that measure the firm's ability to pay off
7. times interest
A system that includes inventory into cost of goods
sold in which the items purchased first are written off
A group of ratios that indicate to what extent a firm
has borrowed funds and how prudently these funds are
9. fixed charge
Costs incurred if the present asset base were
The ratios that measure return on sales, assets and
analysis of performance over a number of years that
12. asset utilization
Measures the firm's ability to meet all fixed
Indicates the strength of the firm regarding its
Chapter 03 - Financial Analysis
3-52
126. Complete the following balance sheet for the Range Company using the following
information:
Debt to Assets = 60 percent
Quick Ratio = 1.1
Asset Turnover = 5x
Fixed Asset Turnover = 12.037x
Current Ratio = 2
Average Collection Period = 16.837 days
Assume all sales are on credit and a 360-day year.
Chapter 03 - Financial Analysis
3-53
Chapter 03 - Financial Analysis
3-54
127. Given the balance sheet and income state for Simmons Maintenance Company, compute
the ratios that are also shown for the industry average. For each ratio, indicate whether
Simmons is better or worse than the industry average.
Chapter 03 - Financial Analysis
3-55
Chapter 03 - Financial Analysis
3-56
3-57
128. Follies Bookstore, the only bookstore close to campus, had net income in 2005 of
$90,000. Here are some of the financial ratios from the annual report.
Using these ratios, calculate the following for Follies Bookstore:
a) Sales
b) Total assets
c) Total asset turnover
d) Total debt
e) Stockholders' equity
f) Return on equity
Chapter 03 - Financial Analysis
3-58
Chapter 03 - Financial Analysis
3-59
Chapter 03 - Financial Analysis
