Hi.

Choose the best answer. State your explanation.

31) The method for directly measuring the value of a firm's equity is:

A) The discounted cash flow method.

B) Market value.

C) Sales multiple.

D) Earnings-based multiple.

E) Enterprise value.

32) Which one of the following refers to the firm's ability to pay its current operating expenses and maturing debt?

A) Discounted cash flow.

B) Liquidity.

C) Earnings base.

D) Profitability.

E) Purchasing power.

33) Which one of the following develops the value of the firm as the present value of the firm's net free cash flows?

A) Discounted cash flow method.

B) Cash flow liquidity method.

C) Multiples-based method.

D) Profitability method.

E) Purchasing power method.

34) A deferred bonus can consist of:

A) Cash only.

B) Stock only.

C) Cash and/or stock.

D) Membership in a fitness club.

35) Which one of the following computes value based on recent annual earnings?

A) Discounted cash flow method.

B) Cash flow liquidity method.

C) Multiples-based method.

D) Book value method.

E) Purchasing power method.

36) Jackson Supply Company has a 2 to 1 current ratio. This ratio would increase to more than 2 to 1 if the company:

A) Purchased a marketable security for cash.

B) Wrote off an uncollectible receivable.

C) Sold merchandise on account that earned a normal gross margin.

D) Purchased inventory on account.

37) Fringe benefits include all of the following except:

A) Travel.

B) Life insurance.

C) Medical benefits.

D) Membership in a fitness club.

E) Performance shares.

38) A current bonus can consist of:

A) Cash only.

B) Stock only.

C) Cash and/or stock.

D) Membership in a fitness club.

39) In service firms, improvement in long term profitability is best measured by all of the following except:

A) Staff utilization.

B) Net revenues.

C) Collections of customer accounts.

D) Materials usage.

-ca