| Question 1 | 2.5 / 2.5 points |
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's quick ratio is:
Question options:
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| 0.85 | ||
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| 2.00 | ||
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| 1.00 | ||
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| 0.75 | ||
| Question 2 | 2.5 / 2.5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's debt ratio is:
Question options:
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| 40.11% | ||
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| 43.02% | ||
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| 55.80% | ||
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| 56.32% | ||
| Question 3 | 2.5 / 2.5 points | ||
How can the depreciation expense amount impact the quality of earnings?
Question options:
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| Firms may not choose from a variety of methods to record depreciation. | ||
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| Firms cannot choose how long they expect an asset to last. | ||
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| Firms may record operating expenses as capital expenditures. | ||
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| Firms may not record operating expenses as capital expenditures. | ||
| Question 4 | 2.5 / 2.5 points | ||
Which of the following statements is true?
Question options:
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| Qualitative components of earnings would include the preparation of a common size income statement. | ||
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| The earnings statement provides management with opportunities for influencing the outcome of reported earnings in ways that may not represent economic reality. | ||
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| Because the financial statements are not interrelated the analyst must conduct an analysis of each statement independent of the others. | ||
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| The higher the quality of financial reporting, the less useful is the information for business decision making. | ||
| Question 5 | 2.5 / 2.5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's days payable outstanding is:
Question options:
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| 7 days | ||
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| 11 days | ||
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| 16 days | ||
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| 22 days | ||
| Question 6 | 2.5 / 2.5 points | ||
All of the following items should be evaluated when assessing the quality of financial reporting on the balance sheet EXCEPT which one? capital expenditures.
Question options:
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| The type of debt used to finance assets--in particular, if short-term debt is used to finance current assets and long-term debt is used to finance long-term assets. | ||
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| Whether operating cash outflows have been erroneously recorded as | ||
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| Disclosures related to off-balance-sheet financing. | ||
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| Disclosures related to operating and capital leases. | ||
| Question 7 | 2.5 / 2.5 points | ||
__________ ratios measure the liquidity of specific assets and the efficiency of managing assets.
Question options:
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| Activity | ||
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| Quick | ||
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| Computational | ||
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| Turnover | ||
| Question 8 | 2.5 / 2.5 points | ||
__________ ratios measure the extent of a firm's financing with debt relative to equity and its ability to cover interest and other fixed charges.
Question options:
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| Leverage | ||
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| Quick | ||
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| Activity | ||
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| Turnover | ||
| Question 9 | 2.5 / 2.5 points | ||
What are the five categories of ratios generally used in financial statement analysis?
Question options:
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| Quick ratios, activity ratios, leverage ratios, profitability ratios, and market ratios | ||
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| Quick ratios, turnover ratios, leverage ratios, profitability ratios, and market ratios | ||
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| Liquidity ratios, activity ratios, leverage ratios, profitability ratios, and market ratios | ||
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| Liquidity ratios, activity ratios, turnover ratios, profitability ratios, and market ratios | ||
| Question 10 | 2.5 / 2.5 points | ||
All of the following are steps of a financial statement analysis except:
Question options:
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| Establish objectives of the analysis | ||
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| Prepare pro forma statements | ||
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| Study the industry in which the firm operates | ||
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| Develop knowledge of the firm and the quality of management | ||
| Question 11 | 2.5 / 2.5 points | ||
What is vendor financing?
Question options:
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| Lending money to customers so they can purchase the lender's products or services. | ||
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| Borrowing money from vendors to purchase supplies needed by a firm. | ||
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| The extent to which a firm finances with debt. | ||
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| The issuance of common stock. | ||
| Question 12 | 2.5 / 2.5 points | ||
How is the cash conversion cycle calculated?
Question options:
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| Average collection period + days inventory held + Days payable outstanding | ||
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| Average collection period - days inventory held + Days payable outstanding | ||
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| Average collection period - days inventory held - Days payable outstanding | ||
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| Average collection period + days inventory held - Days payable outstanding | ||
| Question 13 | 2.5 / 2.5 points | ||
What is the difference between the current ratio and the cash flow liquidity ratio?
Question options:
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| Both measure short-term solvency; the numerator of the current ratio includes the current assets and the numerator of the cash flow liquidity ratio includes only cash. | ||
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| Both measure short-term solvency; the numerator of the current ratio includes the current assets and the numerator of the cash flow liquidity ratio includes only cash, cash equivalents, marketable securities, and cash flow from operating activities. | ||
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| Both measure long-term solvency; the numerator of the current ratio includes the current assets and the numerator of the cash flow liquidity ratio includes only cash, cash equivalents, marketable securities, and cash flow from operating activities. | ||
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| Current ratio measures short-term solvency and cash flow liquidity measure long-term solvency; the numerator of the current ratio includes the current assets and the numerator of the cash flow liquidity ratio includes only cash, cash equivalents, marketable securities, and cash flow from operating activities. | ||
| Question 14 | 2.5 / 2.5 points | ||
Use the following selected financial information for Wilcox Corporation to answer the question below.
Wilcox's times interest earned ratio is:
Question options:
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| 1.50 | ||
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| 4.50 | ||
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| 6.63 | ||
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| 8.60 | ||
| Question 15 | 2.5 / 2.5 points | ||
Which ratios help assess the firm's ability to meet cash needs as they arise?
Question options:
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| Current ratio and cash flow liquidity ratio | ||
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| Average collection period and net profit margin | ||
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| Debt ratio and dividend payout | ||
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| Operating profit margin and return on equity | ||
| Question 16 | 2.5 / 2.5 points | ||
Supplementary schedules, such as data related to the breakdown of key financial figures by operating segment,:
Question options:
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| are helpful to financial statement analysts. | ||
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| are not helpful to financial statement analysts. | ||
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| are not applicable for financial statement analysts. | ||
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| cannot be used by financial statement analysts. | ||
| Question 17 | 2.5 / 2.5 points | ||
__________ ratios measure a firm's ability to meet cash needs as they arise.
Question options:
|
| quick | ||
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| Liquidity | ||
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| turnover | ||
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| computational | ||
| Question 18 | 2.5 / 2.5 points | ||
__________ ratios measure returns to stockholders and the value the marketplace puts on a company's stock.
Question options:
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| Leverage | ||
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| Quick | ||
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| Market | ||
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| Turnover | ||
| Question 19 | 2.5 / 2.5 points | ||
A __________ statement contains useful information about the board of directors and executive compensation, option grants, audit-related matters, related party transactions and proposals to be voted on by shareholders.
Question options:
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| auditor's | ||
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| 10-K | ||
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| proxy | ||
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| manager's discussion and analysis | ||
| Question 20 | 2.5 / 2.5 points | ||
What is a "Big Bath"?
Question options:
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| The elimination of expenses by hiding them in a reserve. |
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| Large charges classified as restructuring charges used to clean up a firm's balance sheet. |
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| One-time charges taken during an acquisition. |
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| The expensing of stock options. |
| Lesson 6 Exam | |
| Question 21 | 2.5 / 2.5 points |
Jesse Corporation reported the following information for the current year:
(1) Net income is $205 million.
(2) Acquisitions were $32 million.
(3) Customer accounts receivable increased by $12 million.
(4) Dividends paid to common shareholders were $8 million.
(5) Depreciation expense was $41 million.
(6) Income tax payable decreased by $11 million.
(7) Long-term debt increased by $28 million.
(8) Accounts payable decreased by $6 million.
(9) Inventories increased by $17 million.
Required: Based on the above information, calculate the cash flow from operating activities.
Question options:
|
| $720 million | ||
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| $600 million | ||
|
| $405 million | ||
|
| $200 million | ||
| Question 22 | 2.5 / 2.5 points | ||
Identify the following as operating (O), financing (F), or investing (I) activities:
Cash from sale of a business segment; Interest payments to lenders
Question options:
|
| Financing; Investing | ||
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| Investing; Operating | ||
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| Operating; Financing | ||
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| Operating; Operating | ||
| Question 23 | 2.5 / 2.5 points | ||
If net cash provided or used by operating, financing and investing activities are added together, the result is:
Question options:
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| net income. | ||
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| the change in cash. | ||
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| cash outflow. | ||
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| cash inflow. | ||
| Question 24 | 2.5 / 2.5 points | ||
An increase in inventory should be __________ to convert net income to cash flow from operating activities. An increase in accounts payable should be __________ to convert net income to cash flow from operating activities.
Question options:
|
| subtracted; subtracted | ||
|
| subtracted; added | ||
|
| added; subtracted | ||
|
| added; added | ||
| Question 25 | 2.5 / 2.5 points | ||
The statement of cash flows shows:
Question options:
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| changes over time rather than the absolute dollar amount of the accounts at a point in time. | ||
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| changes over time and the absolute dollar amount of the accounts at a point in time. | ||
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| changes over time or the absolute dollar amount of the accounts at a point in time. | ||
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| the absolute dollar amount of the accounts at a point in time. | ||
| Question 26 | 2.5 / 2.5 points | ||
Which of the following items would be classified as financing activities on the statement of cash flows?
Question options:
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| Payments for inventory, payments to lenders, and payments for taxes | ||
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| Loans to others, returns from loans to others, and acquisition of land | ||
|
| Proceeds from borrowing, payment of dividends, and repayment of debt | ||
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| Sales of goods, repayment of debt, and loans to others | ||
| Question 27 | 2.5 / 2.5 points | ||
Indicate whether each of the following items would result in net cash flow from operating activities being higher (H) or lower (L) than net income.
Decrease in accrued liabilities; Loss on sale of assets; Decrease in accounts receivable
Question options:
|
| Higher; Lower; Higher | ||
|
| Lower; Higher; Higher | ||
|
| Lower; Higher; Lower | ||
|
| Higher; Higher; Lower | ||
| Question 28 | 2.5 / 2.5 points | ||
Identify the following as operating (O), financing (F), or investing (I) activities:
Repurchase of a firm's own shares; Cash collections from loans to others
Question options:
|
| Financing; Investing | ||
|
| Investing; Operating | ||
|
| Operating; Financing | ||
|
| Operating; Operating | ||
| Question 29 | 2.5 / 2.5 points | ||
What is implied if the accounts receivable account has increased?
Question options:
|
| Cash flow from operating activities is greater relative to net income. | ||
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| Cash flow from operating activities is less relative to net income. | ||
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| The firm's sales have increased relative to the prior year. | ||
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| None of the above | ||
| Question 30 | 2.5 / 2.5 points | ||
Which of the following items would be classified as operating activities on the statement of cash flows?
Question options:
|
| Acquisitions of equipment, payment of dividends, and revenue | ||
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| Payments for inventory, payments for salaries, and cash received from sale of goods | ||
|
| Proceeds from borrowing, payments of dividends, and purchases of supplies | ||
|
| Payments on loans, payments for taxes, and payments for rent | ||
| Question 31 | 0 / 2.5 points | ||
The following question is based on the indirect method of presenting cash flow from operating activities. Indicate whether the following items will be added or subtracted from net income to obtain cash flow from operating activities.
How will a gain from an asset sale and a decrease in an accrued liability affect net income?
Question options:
|
| A gain from an asset sale will be added to net income to obtain cash <br /> flow from operating activities; A decrease in an accrued liability will <br /> be added to net income to obtain cash flow from operating activities | ||
|
| A gain from an asset sale will be added to net income to obtain cash <br /> flow from operating activities; A decrease in an accrued liability will <br /> be subtracted from net income to obtain cash flow from operating activities (INCORRECT) | ||
|
| A gain from an asset sale will be subtracted from net income to obtain <br /> cash flow from operating activities; A decrease in an accrued liability <br /> will be added to net income to obtain cash flow from operating activities | ||
|
| A gain from an asset sale will be subtracted from net income to obtain <br /> cash flow from operating activities; A decrease in an accrued liability <br /> will be subtracted from net income to obtain cash flow from operating activities | ||
| Question 32 | 2.5 / 2.5 points | ||
Analyzing cash inflows is important to determine in a firm. What is the preferred method of generating cash?
Question options:
|
| Securing cash from external sources because this demonstrates longevity potential | ||
|
| Securing cash from external sources because this is the preferred method | ||
|
| Securing little cash from operations because this has potential for possible failure | ||
|
| Securing more cash from operations because this is the preferred method | ||
| Question 33 | 2.5 / 2.5 points | ||
Identify the following as operating (O), financing (F), or investing (I) activities:
Proceeds from borrowing; Purchases of property, plant and equipment
Question options:
|
| Financing; Investing | ||
|
| Investing; Operating | ||
|
| Operating; Financing | ||
|
| Operating; Operating | ||
| Question 34 | 2.5 / 2.5 points | ||
Identify the following as operating (O), financing (F), or investing (I) activities:
Prepaid expenses; Marketable securities
Question options:
|
| Operating; Financing | ||
|
| Financing; Operating | ||
|
| Operating; Investing | ||
|
| Financing; Investing | ||
| Question 35 | 2.5 / 2.5 points | ||
N&M Corporation reported the following information for the current year:
(1) Net income is $560 million.
(2) Sales of assets $26 million.
(3) Customer accounts receivable decreased by $14 million.
(4) Repurchases of common stock were $20 million.
(5) Depreciation expense was $38 million.
(6) Income tax payable increased by $4 million.
(7) Long-term debt decreased by $13 million.
(8) Accounts payable increased by $9 million.
(9) Inventories increased by $24 million.
Required: Based on the above information, calculate the following items the cash flow from operating activities.
Question options:
|
| $574 million | ||
|
| $587 million | ||
|
| $601 million | ||
|
| $612 million | ||
| Question 36 | 2.5 / 2.5 points | ||
Jesse Corporation reported the following information for the current year:
(1) Net income is $205 million.
(2) Acquisitions were $32 million.
(3) Customer accounts receivable increased by $12 million.
(4) Dividends paid to common shareholders were $8 million.
(5) Depreciation expense was $41 million.
(6) Income tax payable decreased by $11 million.
(7) Long-term debt increased by $28 million.
(8) Accounts payable decreased by $6 million.
(9) Inventories increased by $17 million.
Required: Based on the above information, calculate the cash flow from financing activities.
Question options:
|
| $8 million | ||
|
| $12 million | ||
|
| $20 million | ||
|
| $40 million | ||
| Question 37 | 2.5 / 2.5 points | ||
Jesse Corporation reported the following information for the current year:
(1) Net income is $205 million.
(2) Acquisitions were $32 million.
(3) Customer accounts receivable increased by $12 million.
(4) Dividends paid to common shareholders were $8 million.
(5) Depreciation expense was $41 million.
(6) Income tax payable decreased by $11 million.
(7) Long-term debt increased by $28 million.
(8) Accounts payable decreased by $6 million.
(9) Inventories increased by $17 million.
Required: Based on the above information, calculate the increase or decrease in the cash balance.
Question options:
|
| $188 million | ||
|
| $220 million | ||
|
| $252 million | ||
|
| $300 million | ||
| Question 38 | 2.5 / 2.5 points | ||
Identify the following as operating (O), financing (F), or investing (I) activities:
Current portion of long-term debt; Accounts receivable
Question options:
|
| Operating; Financing | ||
|
| Financing; Operating | ||
|
| Operating; Investing | ||
|
| Financing; Investing | ||
| Question 39 | 2.5 / 2.5 points | ||
Which of the following items are included in the adjustments to net income to obtain cash flow from operating activities?
Question options:
|
| Payment of dividends and depreciation expense | ||
|
| The change in accounts receivable and the acquisition of land | ||
|
| The gain from an asset sale and the payment of dividends | ||
|
| The change in inventory and depreciation expense | ||
| Question 40 | 2.5 / 2.5 points | ||
Indicate whether each of the following items would result in net cash flow from operating activities being higher (H) or lower (L) than net income.
Decrease in deferred tax assets; Increase in deferred revenue; Decrease in income taxes payable
Question options:
|
| Higher; Lower; Higher |
|
| Lower; Higher; Higher |
|
| Lower; Higher; Lower |
|
| Higher; Higher; Lower |
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