Fin 571 Quiz Week 2
| Question 1 | |
Which one of the following statements about trend analysis is NOT correct? | It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm. | | All of these are true statements. | | The Standard Industrial Classification (SIC) System is used to identify benchmark firms. | | This benchmark is based on a firm's historical performance. | | | Question 2 | |
Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio? | 18.34 times | | 14.15 times | | None of these | | 15.42 times | Question 3 | |
Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars. | $1,191 million | | $1,715 million | | $1,421 million | | $1,651 million | Question 4 | |
Coverage ratios, like times interest earned and cash coverage ratio, allow | a firm's creditors to assess how well the firm will meet its interest obligations. | | a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense. | | a firm's management to assess how well they meet short-term liabilities. | | a firm's shareholders to assess how well the firm will meet its short-term liabilities. | Question 5 | |
Peer group analysis can be performed by | a) management choosing a set of firms that are similar in size or sales, or who compete in the same market. | | b) using the average ratios of this peer group, which would then be used as the benchmark. | | c)
Which one of the following statements about trend analysis is NOT correct? | It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm. | | All of these are true statements. | | The Standard Industrial Classification (SIC) System is used to identify benchmark firms. | | This benchmark is based on a firm's historical performance. | | | Question 2 | |
Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio? | 18.34 times | | 14.15 times | | None of these | | 15.42 times | Question 3 | |
Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars. | $1,191 million | | $1,715 million | | $1,421 million | | $1,651 million | Question 4 | |
Coverage ratios, like times interest earned and cash coverage ratio, allow | a firm's creditors to assess how well the firm will meet its interest obligations. | | a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense. | | a firm's management to assess how well they meet short-term liabilities. | | a firm's shareholders to assess how well the firm will meet its short-term liabilities. | Question 5 | |
Peer group analysis can be performed by | a) management choosing a set of firms that are similar in size or sales, or who compete in the same market. | | b) using the average ratios of this peer group, which would then be used as the benchmark. | | c)