1.(Ch 4) Presented below are select ratios from the Blue Fly annual report:

year 1 Year 2

Accounts receivable turnover 8.2x 7.2x

Receivable collection period 44.5 days 50.7days

Inventory turnover 12.6x 14.2x

Inventory-on-hand period 29.0 days 25.7days

Which statement is true concerning the above ratios?

Select one:

a. Blue Fly's accounts receivable collection period improved

b. The company's inventory management improved

c. Blue Fly sold more inventory during Year 2 than during Year 1

d. It took Blue Fly longer to collect amounts due from customers during Year 1 than it did during Year 2

2.(Ch 4) A capital intensive business is one that:

Select one:

a. Has a high percentage of debt capital compared to equity capital

b. Has a high percentage of total assets that are long-lived assets

c. Both of the above

d. None of the above

3.(Ch 4) Credit decisions are most concerned with:

Select one:

a. The amount of "upside" potential

b. The company's ability to make interest and principal payments

c. The cost of debt capital

d. The Company's intrinsic value

4.(Ch 4) Equity investment decisions are most concerned with:

Select one:

a. Ability to make debt interest and principal payments

b. The "upside" potential and intrinsic value of the company

c. The types of assets purchased

d. All of the above

5.(Ch 4) Presented below are select financial data from Pfizer's annual report:

Amounts in millions

Balance sheet year 1 year 2

Accounts receivable (net) $9,367 $13,765

Inventory 6,660 6,039

Income statement

Net sales $52,516 $61,298

Cost of goods sold 7,541 8,525

What can be said about Pfizer's accounts receivable turnover for Year 2?

Select one:

a. It improved from Year 1 to Year 2

b. Pfizer collected receivables less effectively in Year 2 as compared to Year 1

c. Fewer customers purchased items on account during Year 2 as compared to

Year 1

d. Customers paid their account balances more quickly during Year 2 as compared to Year 1

6.(Ch 4) Presented below are selected amounts from Moe's Southwest Grill's financial statements:

Amounts in thousands

Income statement

Net sales

$545,000

Net earnings

46,000

Balance sheet

Shareholders' equity

265,000

Statement of cash flow

Dividends to shareholders

39,000

What is Moe's sustainable growth rate?

Select one:

a. 2.61%

b. 17.16%

c. 15.21%

d. 8.44%

7.(Ch 4) Presented below are selected amounts from Wilson.'s financial statements:

Amounts in thousands

Balance sheet

Accounts receivable

$ 22,800

Inventory

41,000

Total assets

569,000

Accounts payable

33,500

Shareholders' equity

288,000

Income Statement

Net sales

621,000

Cost of goods sold

325,000

Interest expense

22,000

Net income

124,000

How many days, on average, does it take Wilson's to pay an outstanding account payable?

Select one:

a. 37.6 days

b. 46.0 days

c. 13.4 days

d. 9.4 days

8.(Ch 4) The Cash Collection Period is:

Select one:

a. The period of time it takes on average to collect accounts receivable

b. The period of time it take on average to pay accounts payable

c. The period of time on average from outlay of cash to purchase inventory to the ultimate collection from the customer

d. The period of time on average inventory is held

9.(Ch 4) Which of the following is NOT a limitation of financial statements?

Select one:

a. Subjective measurement

b. Lack of timeliness

c. Incomplete data

d. Flexibility to choose accounting methods

e. All the above are limitations of financial statements

10.(Ch 4) Which of the following is correct regarding the process of benchmarking?

Select one:

a. It occurs when a company increases the price of its products and reduces operating expenses

b. It enhances financial analysis by comparing a company's financial ratios with those of competing companies in the same industry

c. It creates substantial sales growth for most companies

d. It is also called trend analysis