Study Guide
Exam 1 FIN370 Fall 2011 – Version B Key
1. You are analyzing a company that has cash of $2,000, accounts receivable of $3,700, fixed assets of $10,900, accounts payable of $6,600, and inventory of $4,100. What is the quick ratio?
a. 1.48
B. .86
c. 3.30
d. .67
e. .30
BLOOMS TAXONOMY QUESTION TYPE: APPLICATION
LEARNING OBJECTIVE NUMBER: 2
LEVEL OF DIFFICULTY: BASIC
Ross - Chapter 003 #45
SECTION: 3.2
TOPIC: QUICK RATIO
TYPE: PROBLEMS
2. Solomon, Inc. has net sales of $745,100 and costs of $590,800. The depreciation expense is $82,600 and the interest paid is $15,500. What is the amount of the firm's operating cash flow if the tax rate is 35 percent?
a. $46,605
b. $52,030
c. $71,700
D. $134,630
e. $105,720
BLOOMS TAXONOMY QUESTION TYPE: APPLICATION
LEARNING OBJECTIVE NUMBER: 4
LEVEL OF DIFFICULTY: INTERMEDIATE
Ross - Chapter 002 #83
SECTION: 2.4
TOPIC: OPERATING CASH FLOW
TYPE: PROBLEMS
3. Which one of the following statements is correct?
A. The NYSE has the most stringent listing requirements.
b. The trading floor for NASDAQ is located in Chicago.
c. The majority of the publicly traded firms in the U.S. are listed on the NYSE.
d. NASDAQ is an auction market.
e. The NYSE is a dealer market.
BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION
LEVEL OF DIFFICULTY: INTERMEDIATE
Ross - Chapter 001 #59
SECTION: 1.6
TOPIC: STOCK EXCHANGES
TYPE: CONCEPTS
4. The Laptop Company has sales of $874,000, a profit margin of 9 percent, a total asset turnover rate of .80, and an equity multiplier of 1.75. What is the return on equity?
a. 15.75 percent
B. 12.60 percent
c. 10.86 percent
d. 7.20 percent
e. 5.14 percent
BLOOMS TAXONOMY QUESTION TYPE: APPLICATION
LEARNING OBJECTIVE NUMBER: 3
LEVEL OF DIFFICULTY: BASIC
Ross - Chapter 003 #81
SECTION: 3.3
TOPIC: DU PONT IDENTITY
TYPE: PROBLEMS
5. A sole proprietorship:
a. is taxed as a separate legal entity.
b. involves significant legal costs during the formation process.
c. can generally raise significant
1. You are analyzing a company that has cash of $2,000, accounts receivable of $3,700, fixed assets of $10,900, accounts payable of $6,600, and inventory of $4,100. What is the quick ratio?
a. 1.48
B. .86
c. 3.30
d. .67
e. .30
BLOOMS TAXONOMY QUESTION TYPE: APPLICATION
LEARNING OBJECTIVE NUMBER: 2
LEVEL OF DIFFICULTY: BASIC
Ross - Chapter 003 #45
SECTION: 3.2
TOPIC: QUICK RATIO
TYPE: PROBLEMS
2. Solomon, Inc. has net sales of $745,100 and costs of $590,800. The depreciation expense is $82,600 and the interest paid is $15,500. What is the amount of the firm's operating cash flow if the tax rate is 35 percent?
a. $46,605
b. $52,030
c. $71,700
D. $134,630
e. $105,720
BLOOMS TAXONOMY QUESTION TYPE: APPLICATION
LEARNING OBJECTIVE NUMBER: 4
LEVEL OF DIFFICULTY: INTERMEDIATE
Ross - Chapter 002 #83
SECTION: 2.4
TOPIC: OPERATING CASH FLOW
TYPE: PROBLEMS
3. Which one of the following statements is correct?
A. The NYSE has the most stringent listing requirements.
b. The trading floor for NASDAQ is located in Chicago.
c. The majority of the publicly traded firms in the U.S. are listed on the NYSE.
d. NASDAQ is an auction market.
e. The NYSE is a dealer market.
BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION
LEVEL OF DIFFICULTY: INTERMEDIATE
Ross - Chapter 001 #59
SECTION: 1.6
TOPIC: STOCK EXCHANGES
TYPE: CONCEPTS
4. The Laptop Company has sales of $874,000, a profit margin of 9 percent, a total asset turnover rate of .80, and an equity multiplier of 1.75. What is the return on equity?
a. 15.75 percent
B. 12.60 percent
c. 10.86 percent
d. 7.20 percent
e. 5.14 percent
BLOOMS TAXONOMY QUESTION TYPE: APPLICATION
LEARNING OBJECTIVE NUMBER: 3
LEVEL OF DIFFICULTY: BASIC
Ross - Chapter 003 #81
SECTION: 3.3
TOPIC: DU PONT IDENTITY
TYPE: PROBLEMS
5. A sole proprietorship:
a. is taxed as a separate legal entity.
b. involves significant legal costs during the formation process.
c. can generally raise significant