Accounting
Net working capital is defined as:
current assets minus current liabilities.
Operating cash flow is defined as:
the cash that a firm generates from its normal business activities.
Shareholders' equity is equal to:
net fixed assets minus long-term debt plus net working capital.
The ratios that are based on financial statement values and used for comparison purposes are called:
financial ratios.
The Bike Shoppe has total assets of $536,712 and an equity multiplier of 1.36. What is the debt-equity ratio?
Debt-equity ratio = 1.36 − 1 = .36
The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:
income statement.
Cash flow to creditors is defined as:
interest paid minus net new borrowing.
Paid-in surplus is classified as:
owners’ equity.
Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations?
SIC
UXZ has sales of $683,200, cost of goods sold of $512,900, and inventory of $74,315. What is the inventory turnover rate?
Inventory turnover = $512,900 / $74,315 = 6.90 times
The financial statement that summarizes a firm's accounting value as of a particular date is called the:
balance sheet.
Cash flow to stockholders is defined as:
dividends paid minus net new equity raised.
Shareholders’ equity is best defined as:
the residual value of a firm.
Which one of the following is a measure of long-term solvency?
Cash coverage ratio
Steve’s Music Supply has a return on equity of 19.3 percent, a profit margin of 10.1 percent, and total equity of $645,685. What is the net income?
Net income = .193 × $645,685 = $124,617.21
Which one of the following terms is defined as the total tax paid divided by the total taxable income?
Average tax rate
Which one of the following is an intangible fixed asset?
Copyright
A firm’s liquidity level decreases when:
inventory is purchased with cash.
The equity multiplier is equal to:
one plus the debt-equity ratio.
ABD common stock is selling for $36.08 a share. The company has earnings per share of $.34 and a book value per share of $12.19. What is the market-to-book ratio?
Market-to-book ratio = $36.08/$12.19 = 2.96
The tax rate that determines the amount of tax that will be due on the next dollar of taxable income earned is called the:
marginal tax rate.
Production equipment is classified as:
a tangible fixed asset.
Given a profitable firm, depreciation _______ taxes.
lowers
Leon is the owner of a corner store. Which ratio should he compute if he wants to know how long the store can pay its bills given its current level of cash and accounts receivable? Assume all receivables are collectible when due.
Quick ratio
Last year, a firm earned $67,800 in net income on sales of $934,600. Total assets increased by $62,000 and total equity increased by $43,500 for the year. No new equity was issued and no shares were repurchased. What is the retention ratio?
Plowback ratio = $43,500/$67,800 = .6416, or 64.16 percent