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The financial statements of Burnaby Mountain Trading Company are given below. The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the share market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's quick ratio for 2008 is ________. A) 1.30 B) 1.50 C) 1.69 D) 2.83 Note: The common shares are trading in the share market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's quick ratio for 2008 is ________.


A) 1.30
B) 1.50
C) 1.69
D) 2.83

E) None of the above
F) B) and C)

Correct Answer

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Look at the following table of data for Key Biscuit Company: Look at the following table of data for Key Biscuit Company: What must have caused the firm's ROE to drop? A) The firm began using more debt as a percentage of financing. B) The firm began using less debt as a percentage of financing. C) The compound leverage ratio was less than 1. D) The operating ROA was declining. What must have caused the firm's ROE to drop?


A) The firm began using more debt as a percentage of financing.
B) The firm began using less debt as a percentage of financing.
C) The compound leverage ratio was less than 1.
D) The operating ROA was declining.

E) C) and D)
F) A) and D)

Correct Answer

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A firm has a P/E ratio of 24 and a ROE of 12%. Its market-to-book-value ratio is ________.


A) 2.88
B) 2.00
C) 1.75
D) 0.69

E) B) and C)
F) B) and D)

Correct Answer

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A firm has a tax burden of 0.7, a leverage ratio of 1.3, an interest burden of 0.8, and a return on sales ratio of 10%. The firm generates $2.28 in sales per dollar of assets. What is the firm's ROE?


A) 12.4%
B) 14.5%
C) 16.6%
D) 17.8%

E) None of the above
F) All of the above

Correct Answer

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Benjamin Graham thought that the benefits from detailed analysis of a firm's financial statements had ________ over his long professional life.


A) increased greatly
B) increased slightly
C) remained constant
D) decreased

E) A) and B)
F) B) and C)

Correct Answer

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Use the following cash flow data of Haven Hardware for the year ended 31 December 2013. Use the following cash flow data of Haven Hardware for the year ended 31 December 2013. What is the net cash provided by or used in investing activities of Haven Hardware? A) ($12 000) B) ($62 000) C) $12 000 D) $164 000 What is the net cash provided by or used in investing activities of Haven Hardware?


A) ($12 000)
B) ($62 000)
C) $12 000
D) $164 000

E) A) and C)
F) B) and C)

Correct Answer

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Economic Value Added (EVA) is:


A) The difference between the return on assets and the opportunity cost of capital times the capital base
B) ROA x ROE
C) A measure of the firm's abnormal return
D) Largest for high-growth firms

E) B) and C)
F) C) and D)

Correct Answer

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Which of the following would result in a cash inflow under the heading 'Cash flow from investing' in the statement of cash flows?


A) Purchase of capital equipment
B) Payments to suppliers for inventory
C) Collections on receivables
D) Sale of production machinery

E) C) and D)
F) A) and B)

Correct Answer

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The highest possible value for the interest burden ratio is ________ and this occurs when the firm ________.


A) 0; uses as much debt as possible
B) 1; uses debt to the point where ROA = interest cost of debt
C) 1; uses no interest bearing debt
D) -1; pays down its existing debts

E) None of the above
F) All of the above

Correct Answer

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If a firm has an ROA of 8%, a debt/equity ratio of 0.5, its ROE is ________.


A) 4%
B) 6%
C) 8%
D) 12%

E) B) and D)
F) C) and D)

Correct Answer

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A firm has a ROE of 20% and a market-to-book ratio of 2.38. Its P/E ratio is ________.


A) 8.40
B) 11.90
C) 17.62
D) 47.60

E) B) and C)
F) All of the above

Correct Answer

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Which of the following assets is most liquid?


A) Cash equivalents
B) Receivables
C) Inventories
D) Plant and equipment

E) A) and C)
F) None of the above

Correct Answer

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The process of decomposing ROE into a series of component ratios is called ________.


A) DuPont analysis
B) technical analysis
C) comparative analysis
D) liquidity analysis

E) None of the above
F) All of the above

Correct Answer

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The financial statements of Burnaby Mountain Trading Company are given below. The financial statements of Burnaby Mountain Trading Company are given below. Note: The common shares are trading in the share market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's current ratio for 2008 is ________. A) 1.30 B) 1.50 C) 1.69 D) 2.83 Note: The common shares are trading in the share market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's current ratio for 2008 is ________.


A) 1.30
B) 1.50
C) 1.69
D) 2.83

E) A) and B)
F) A) and D)

Correct Answer

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Operating ROA can be found as the product of ________.


A) Return on sales x ATO
B) Tax burden x Interest burden
C) Interest burden x Leverage ratio
D) ROE x Dividend payout ratio

E) None of the above
F) A) and C)

Correct Answer

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