**Chapter 3 Finance Practice **

**QUESTION 1**

If the Debt/Equity Ratio is 0.50. What is the Debt Ratio?

0.50 | ||

0.375 | ||

0.60 | ||

1 | ||

o.3333 | ||

**QUESTION 2**

If the Debt/Equity Ratio is 0.60. What is the Debt Ratio?

0.40 | ||

0.375 | ||

0.60 | ||

1 | ||

o.4444 | ||

**QUESTION 3**

The Jamestown Group has equity of $421,000, sales of $792,000, and a profit margin of 6 percent. What is the return on equity?

8.87 percent | ||

6.19 percent | ||

11.29 percent | ||

10.27 percent | ||

9.37 percent |

**QUESTION 4**

Top Sound, Inc., has total assets of $212,000, a debt-equity ratio of .6, and net income of $9,500. What is the return on equity?

6.87 percent | ||

7.17 percent | ||

7.34 percent | ||

7.50 percent | ||

7.67 percent |

**QUESTION 5**

A firm has total equity of $70,312.50, a profit margin of 8 percent, an equity multiplier of 1.6, and a total asset turnover of 1.3. What is the amount of the firm s sales?

$91,406 | ||

$112,500 | ||

$121,500 | ||

$137,500 | ||

$146,250 | ||

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**QUESTION 6**

XYZ earned a net profit margin of 5.8% last year and had an equity multiplier of 3.6. If its total assets are $84 million and its sales are 158 million, what is the firm’s return on assets?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

**QUESTION 7**

If the debt ratio is 0.80, the Equity Multiplier is:

0.8 | ||

0.2 | ||

1 | ||

5 | ||

1.8 | ||

4 | ||

QUESTION 8

If the Debt/Equity Ratio is 0.80. What is the Debt Ratio?

0.40 | ||

0.375 | ||

0.60 | ||

1 | ||

o.4444 | ||

**QUESTION 9**

ABC’s balance sheet indicates a book value of shareholders’ equity of $742,470. The firm’s earning per share are $2.2 and the price-earnings ratio is 12.63. If there are 47,822 shares outstanding, what is the market value per share? **Enter your answer rounded off to two decimal points. Do not enter $ in the answer box.** **Hint: Market value per share is same as market price per share.**

**QUESTION 10**

A firm has sales of $350,000, a profit margin of 6 percent, a total asset turnover rate of 1.25, and an equity multiplier of 1.4. What is the return on equity?

10.50 percent | ||

7.50 percent | ||

7.75 percent | ||

11.11 percent | ||

5.36 percent | ||

**QUESTION 11**

If the debt ratio is 0.75, the Debt/Equity Ratio is:

0.75 | ||

0.25 | ||

1 | ||

5 | ||

1.75 | ||

3 | ||

**QUESTION 12**

XYZ earned a net profit margin of 7.7% last year and had an equity multiplier of 3.2. If its total assets are $114 million and its sales are 149 million, what is the firm’s debt ratio? **Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.**

**QUESTION 13**

Wexford Hotels has sales of $289,600, depreciation of $21,400, interest of $1,300, Operating Income of $23,269.70, and a tax rate of 34 percent. What is the times interest earned ratio?

20 | ||

17.9 | ||

18.5 | ||

16 | ||

19.8 | ||

**QUESTION 14**

A firm has total assets of $682,000 and total equity of $424,000. What is the debt-equity ratio?

1.61 | ||

0.61 | ||

1.64 | ||

0.62 | ||

**QUESTION 15**

The Baker s Dozen has current liabilities of $5,600, net working capital of $2,100, inventory of $3,900, and sales of $13,500. What is the quick ratio? Assume pre-paid expenses are zero.

0.68 | ||

0.70 | ||

1.38 | ||

1.47 | ||

2.08 |

**QUESTION 16**

If Roten, Inc., has a equity multiplier of 1.75, total asset turnover of 1.30, and profit margin of 8.5 percent, what is the return on equity (ROE)?

19.34% | ||

2.275% | ||

1.75% | ||

14.875% | ||

**QUESTION 17**

ABC’s balance sheet indicates a book value of shareholders’ equity of $809,850. The firm’s earning per share are $2.7 and the price-earnings ratio is 9.12. If there are 41,087 shares outstanding, what is the market-to-book ratio? **Enter your answer rounded off to two decimal points.** **Hint: Market value per share is same as market price per share**

**QUESTION 18**

ABC earned a net profit margin of 4.3% last year and had an equity multiplier of 2.2. If its total assets are $95 million and its sales are 120 million, what is the firm’s return on equity? **Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.**

**QUESTION 19**

If the debt ratio is 0.20, the Equity Multiplier is:

1.25 | ||

0.25 | ||

1.20 | ||

0.20 | ||

0.80 | ||

1.5 | ||

**QUESTION 20**

ABC Corporation has the following ratios: Total Asset Turnover= 1.6 Total debt to total assets= 0.5 Current Ratio= 1.7 Current Liabilities= $2,000,000 Sales = $16,000,000 What is the amount of current assets?

2,000,000 | ||

3,200,000 | ||

3,400,000 | ||

1,000,000 | ||

**QUESTION 21**

A firm has net working capital of $1,100 and current liabilities of $2,800. What is the current ratio?

.98 | ||

2.56 | ||

.39 | ||

.72 | ||

1.39 | ||

**QUESTION 22**

Blackstone, Inc., has net income of $9,738, a tax rate of 35%, and interest expense of $798. What is the times interest earned ratio?

Enter your answer rounded off to two decimal points.

**QUESTION 23**

Toast and Butter, Inc., has total assets of $712,000 and an equity multiplier of 1.6. What is the debt-equity ratio?

0.60 | ||

0.67 | ||

0.63 | ||

1.60 | ||

1.67 | ||

**QUESTION 24**

ABC’s balance sheet indicates a book value of shareholders’ equity of $710,884. The firm’s earning per share are $2.9 and the price-earnings ratio is 11.02. If there are 43,006 shares outstanding, what is the book value per share?**Enter your answer rounded off to two decimal points. Do not enter $ in the answer box. Hint: Market value per share is same as market price per share**

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**QUESTION 25**

If the debt ratio is 0.60, the Debt/Equity Ratio is:

1.25 | ||

0.25 | ||

1.20 | ||

0.20 | ||

0.80 | ||

1.5 | ||

**QUESTION 26**

XYZ has total sales of $215, assets of $100, return on equity of 26%, and net profit margin of 8%. What is the amount of equity?

Enter you answer rounded off to two decimal points. Do not enter $ in the answer box.

**QUESTION 27**

ABC’s Balance Sheet lists Current Assets of $300, Current Liabilities of $200, Fixed Assets of $700, Long-Term Debt of $400. ABC has 200 shares outstanding. What is the market-to-book ratio (MTB) if the market price per share is $8?

4 times | ||

400 times | ||

2 times | ||

8 times | ||

0.25 times |

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**QUESTION 28**

Smith Corporation has current assets of $11,400, inventories of $4,000, and a current ratio of 2.6. What is Smith s acid test ratio? Assume pre-paid expenses is zero.

1.69 | ||

0.54 | ||

0.74 | ||

1.35 | ||

**QUESTION 29**

The ability of the firm to pay off short-term obligations as they come due is indicated by:

**QUESTION 30**

ABC, Inc., has a market-to-book ratio of 3, net income of $84,018, a book value per share of $21, and 53,226 shares of stock outstanding. What is the price-earnings ratio?

Enter your answer rounded off to two decimal points.

**QUESTION 31**

ABC has total sales of $214, assets of $114, return on equity of 32%, and net profit margin of 8%. What is the debt ratio? **Enter you answer in percentages rounded off to two decimal points. Do not enter % in the answer box.**