1.Which ratio measures the ability of a company both to control costs of inventories and to pass along price increases through sales to customers?

A.Net profit margin

B.Operating profit margin

C.Gross profit margin

D.Return on assets

2 PNW Corp. reports 2015 and 2016 total revenues of $80 million and $92 million, respectively.If we expect prior growth to persist, we would forecast a revenue growth rate of:

A.20%

B.15%

C.35%

D.25%

3 What is the first step in the analysis of financial statements?

A.Check the auditors report.

B.Do a common-size analysis.

C.Specify the objective of the analysis.

D.Check references containing financial information.

4 Which of the following is incorrect with respect to financial statement articulation?

A.Articulation makes clear that there is a correct order for the preparation of financial statements.

B.Articulation refers only to the linkage of the balance sheet and income statement.

C.Articulation means that all the financial statements are mathematically linked within and across time.

D.While each financial statement can stand alone to offer significant information about a firm, they do not allow an in depth view of the whole financial state of the company until the linkage of each to one another is understood.

5 A firm's days of sales outstanding are 23.4, days of inventory on hand are 45.9, and the number of days of payables are 34.7.When credit sales are made by the firm, the buyer agrees to pay balances owed in 30 days.

What is the firm's cash conversion cycle?

A.34.6 days

B.41.2 days

C.69.3 days

D.104.0 days

6 Google has an equity book value of $87B per the company's latest 10-Q.Google shares trade at $535.Google has 678MM shares outstanding.Google also has $59B in cash, $5B in debt.

A.Google's enterprise value is approximately $309B.

B.Google's equity market value (market cap) is approximately $401B.

C.Google's equity market value (market cap) is approximately $465B.

D.Google's enterprise value is approximately $417B.

7 Total debt as presented on the balance sheet:

A.$ 11,749

B.$ 5,047

C.$ 10,282

D.$ 8,313

8 When projecting the balance sheet, what happens when the initial balance sheet yields estimated total assets greater than the sum of total liabilities and equity?

A.The company will need additional financing from external sources like the revolver.

B.The company will not be able to pay for expenses in the future.

C.The company has negative shareholder's equity.

D.The company projected a loss.

9 In your financial forecast, you're projecting Capital Expenditures as a percentage of revenue, and Depreciation also as a percentage of revenue. To ensure that the PP&E figure never changes, you set CapEx as a % of revenue equal to Depreciation as a % of revenue. For example, CapEx is 3% of revenue and Depreciation is also 3% of revenue. What's the MAIN flaw with projecting CapEx and Depreciation this way?

A.You should never project Depreciation as a percentage of revenue - it should always be tied to the PP&E balance.

B.To grow, the company will likely need to do more than simply maintain its existing PP&E - it will most likely need to spend to acquire or build new assets such as land, factories, and equipment.

C.A company will depreciate its PP&E over many years, so it's not accurate to assume that Depreciation in a single year will always equal CapEx in that year.

D.CapEx and Depreciation rarely move in-line with revenue because a company's need to re-invest into its own business is independent of its sales growth.

10 Which of the following is not true?

A.The Income Statement is best used to develop an understanding of the operating performance of the firm.

B.The Statement of Cash Flows is best used to develop an understanding of the earnings quality of the firm.

C.The Statement of Comprehensive Income is best used to develop an understanding of the total cash flows for the firm.

D.The Balance Sheet is best used to develop an understanding of the risk structure of the firm.