21

Not yet answered Points out of 5.00 Flag question

Question text

I anticipate that through cost-cutting measures, I will be able to increase my gross profit margin, operating profit margin and net profit margin in the upcoming year. Assuming that my sales also increase modestly, that my level of debt does not change and I do not enter into any new operating or capital leases, what will likely happen to both my TIE and FCC ratios? Select one:

A. FCC will stay the same but TIE will increase.B. Both the TIE and the FCC will increase.C. TIE will stay the same but my FCC will decrease.D. Both the TIE and the FCC will decrease.E. None of the above will occur.

Question22

Not yet answered Points out of 5.00 Flag question

Question text

Both my Net Profit Margin and my Total Asset Turnover are expected to decrease over the next year. What impact, if any, will this likely have on my Return on Assets? Select one:

A. ROA will increaseB. ROA will decreaseC. There will be no impact

Question23

Not yet answered Points out of 5.00 Flag question

Question text

Which one of the following successful strategies will increase the Return on Assets (ROA)? Select one:

A. Increase the investment in assets used in the businessB. Increase the operating profit marginC. Decrease sales volumeD. Decrease the annual depreciation amounts of long-lived assets

Question24

Not yet answered Points out of 5.00 Flag question

Question text

Other things held constant, which of the following will NOT affect the current ratio, assuming an initial current ratio greater than 1.0?

Select one:

A. Fixed assets are sold for cashB. Long-term debt is issued to pay off current liabilitiesC. Accounts receivable are collected in cashD. Cash is used to pay off accounts payable

Question25

Not yet answered Points out of 5.00 Flag question

Question text

The conversion of a LIFO inventory to approximate the inventory at FIFO is accomplished through application of which one of the following formulas? Select one:

A. FIFO inventory = LIFO inventory x LIFO reserveB. FIFO inventory = LIFO inventory / LIFO reserveC. FIFO inventory = LIFO inventory - LIFO reserveD. FIFO inventory = LIFO inventory + LIFO reserve

Question26

Not yet answered Points out of 5.00 Flag question

Question text

Acme Inc. included the following information in its annual report: By how much did Cost of Goods Sold increase from 20X1 to 20X2?

Select one:

A. 10.9%B. 12.2%C. 13.1%D. 15.0%

Question27

Not yet answered Points out of 5.00 Flag question

Question text

My company is going to lease a scissor lift from A-1 Equipment that will help us clean the windows on our buildings. If we were to purchase the lift, it would cost $20,000. The lift has an estimated life of 10 years and we have an 8-year lease term. Our monthly lease payment is going to be $200. At the end of the lease, A-1 Equipment will retain ownership of the lift. We do not have an option to purchase the equipment. Based on just this information, how will we need to account for this leased item on our financial records.

Select one:

A. The item must be accounted for as a Capital Lease.B. The item must be accounted for as an Operating Lease.C. There is insufficient information given to assess whether or not this needs to be accounted for as either a Capital or Operating Lease.

Question28

Not yet answered Points out of 5.00 Flag question

Question text

Compared to a firm with capital leases, a firm with operating leases will have

Select one:

A. a higher ROAB. a lower ROAC. a higher Debt-to-Equity ratioD. none of the above since operating leases are considered "off balance sheet"

Question29

Not yet answered Points out of 10.00 Flag question

Question text

You have the following current ratioinformation for a company but no industry or competitor information. Identify 3 conclusions (either positive ornegative) that you might draw from this limited information regarding thiscompany's liquidity position.
		2014	2013	2012	2011	2010
	Current ratio	1.2	1.2	1.6	1.8	2.0

Paragraph

Path:p

Question30

Not yet answered Points out of 10.00 Flag question

Question text

The following two sets of ratios belong to the same company. Comment on the following from a trend perspective as well as what these ratios may indicate. Why would DSR rise while DSI falls?

	20X6	20X5	20X4	20X3	20X2	Ind. Average
DSR (in days)	57	44	33	34	34	36

	20X6	20X5	20X4	20X3	20X2	Ind. Average
DSI (in days)	30	33	39	38	42	32

Paragraph

Path:p

Question31

Not yet answered Points out of 10.00 Flag question

Question text

Using the information below calculate ROA and ROE for this company for 20X4.

Company A	20X6	20X5	20X4	20X3	20X2	Ind. Average
Net Profit Margin	4.5%	4.7%	4.7%	4.8%	5.0%	4.7%
Total Asset TO	5.5	5.8	5.9	6.5	7.0	6.0
Finl Leverage Ratio	1.4	1.4	1.4	1.5	1.5	1.5

Paragraph

Path:p

Question32

Not yet answered Points out of 10.00 Flag question

Question text

A Company is trying to determine why their overall profit margin is low. Considering the information presented below, where within the multi-step income statement would you recommend that management look to potentially identify and solve the problem and what types of expense items could be a concern for this company?

Company B	20X6	20X5	20X4	20X3	20X2	Ind. Average
Gross Profit Margin	51.0%	51.0%	49.0%	50.0%	51.0%	50.0%
Oper Profit Margin	12.0%	12.0%	13.0%	12.0%	11.0%	12.0%
Net Profit Margin	3.0%	4.0%	4.0%	5.0%	5.0%	6.0%

Paragraph

Path:p

Question33

Not yet answered Points out of 10.00 Flag question

Question text

General information applicable to Phoenix Company is provided below.

		20X4	20X3	20X2	20X1	20X0	Primary Competitor
Debt Ratio (Book-based)	72%	69%	66%	60%	58%	64%
TIE		6.5	6.0	4.9	5.8	7.2	7.0
Bond Rating (S&P)	BBB-	BB+	BB	BBB+	AA-	BBB+

What is indicated by Phoenix Company's bond ratings?Do you see anything positive and how does it compare to the primary competitor?

Paragraph

Path:p

Question34

Not yet answered Points out of 10.00 Flag question

Question text

General information applicable to Phoenix Company is provided below.

		20X4	20X3	20X2	20X1	20X0	Ind. Average
Debt Ratio (Book-based)	72%	69%	66%	60%	58%	64%
TIE		6.5	6.0	4.9	5.8	7.2	7.0
Bond Rating (S&P)	BBB-	BB+	BB	BBB+	AA-	NA

What is indicated by this company's TIE? Give a general commentary on the pattern exhibited by the TIE and what it indicates regarding Phoenix's overall debt paying ability.

Paragraph

Path:p

Question35

Not yet answered Points out of 15.00 Flag question

Question text

A few liquidityratios for Bravo Company are shown below. What do these liquidity ratios reveal to you about Bravo Company's liquidity position? Ifthey were available to you, what additional ratios would you like to review in order to get a clearer picture of the strength or weakness of the Bravo Company?
		2014	2013	2012	2011	2010	Ind. Average
	Current ratio	2.6	2.4	2.5	2.2	1.9	1.8
	Quick Ratio	0.9	0.8	1.0	0.9	1.0	0.9
	Cash Ratio	0.5	0.5	0.6	0.6	0.5	0.5

Paragraph

Path:p

Question36

Not yet answered Points out of 15.00 Flag question

Question text

At year end, a company with significant off-Balance Sheet operating leases has total assets of $90,000,000, and total equity of $36,000,000. The notes to the financial statements disclose the following long-term lease obligations. Complete the adjustment to capitalize these operating leases and compute their debt ratio before and after the adjustment.

Year	Future Lease Obligation
20X1	3,000,000
20X2	3,000,000
20X3	2,000,000
20X4	2,000,000
20X5	1,000,000
20X6 and after	10,000,000

Paragraph

Path:p

Question37

Not yet answered Points out of 5.00 Flag question

Question text

Comment on the following from a trend perspective as well as the pros and cons of what this ratio may indicate.

	20X6	20X5	20X4	20X3	20X2	Ind. Average
DSI (in days)	17	20	23	24	24	32

Paragraph

Path:p

Question38

Not yet answered Points out of 5.00 Flag question

Question text

General information applicable to Phoenix Company is provided below.

		20X4	20X3	20X2	20X1	20X0	Ind. Average
Debt Ratio (Book-based)	72%	69%	66%	60%	58%	64%
TIE		6.5	6.0	4.9	5.8	7.2	7.0
Bond Rating (S&P)	BBB-	BB+	BB	BBB+	AA-	NA

From the information given above, calculate the Financial Leverage Ratio (FLR) for Phoenix Company for the year 20X4. This is an all-or-nothing problem - no partial credit.