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Managers strive to maximize shareholders wealth. Improving the firms return on equity does not necessarily mean that the shareholder wealth is increased. What problem may arise if a firm relies too heavily on ROE to measure performance?	ROE does not consider the amount of invested capital A focus on roe cause managers to turn down profitable projects ROE does not consider risk All of the above
A high current ratio generally indicates	A very strong, state liquidity position Too much old inventory that will have to be written off or too many receivables that may turn into bad debts. The firm has too much cash, receivables and inventory relative to its sales. All of the above
A firm has current assets of P3,000,000 with a current ratio of 1.2 its quick ratio is 0.8. what is its inventory?
Oriental manufacturing reported the following information: Net income----- P120,000 Return on Assets---- 6% Interest expense--------84,000 Tax rate----------------- 40% What is its basic earning power?
Which of the following would decrease a firm's working capital?	The firm purchases inventory on account The firm purchases an equipment paying 20% down payment and signing a long-term note for the remaining balance The firm receives a payment on an outstanding accounts receivable The firm writes off a bad account receivable using the allowance method for bad debts.
Among the different types of dividends, on which types would ratio analysis be based on?	Cash dividend Stock dividend Liquidating dividend Dividend in kind
It is mode of estimating the likehood of improvement or deterioration an entity's financial condition.	Horizontal analysis Trend analysis Vertical analysis Ratio analysis
In the analysis of cost of sales, which among the following reasons would not change the gross profit margin?	Sales price have not change at the same rate as the change in inventory cost Sales price have declined due to competition or have gone up due to greater demand The products sold changed to include products with lower o higher profit margins No change in the inventory level
Shell company has P750,000 in accounts receivable and its days sales outstanding (DSO) is 54 days. It wants to reduce its DSO to 35 days by pressuring more of its customers to pay their bills on time. if this policy is adopted, the company's average sales will fall by 10%. What will be the level of accounts receivable following the change? Assume a 360-day year.
In doing revenue analysis, the following rules regarding recognition of revenues must be considered except:	The risk of ownership must have been effectively passed on to the buyer The revenue recognized must normally result either in an increase in cash, receivables, and other assets, or decrease in a liability Activities for creation of revenue must be substantially complete The revenue must be able to be measured or estimated with substantial accuracy Level of competition and elasticity of product demand has been considered
Anakis Inc. has P500,000 debt outstanding and it pays a 10% interest. Its annual sales are P3,500,000, its tax rate is 30% and its net profit margin is 5%. What is the Times-Interest-Earned Ratio?
In performing financial statement analysis, results must be compared with prescribed set of standards. Which among the following would be the basis of the analyst in drawing his interpretations and conclusions?	Industry standards to which the firm belongs Standards used by firm's successful competitors Company budget for the same period Standards used by the firm prior periods All of the above
A high receivable turnover rate does not automatically mean good or efficient collection of the company. What factors may have caused the high turnover rate?	Strike and plant shutdown during the previous period Change in sales terms Price level change Higher cash sales Special sales promotion All of the above
In which situation are market ratios significant?	For a firm's decision on how to offer to another firm in a potential merger or acquisition For investment bankers to set the share price for a new stock issue or initial public offering. When an investor decides to buy or sell a stock All of the above None of the above
In evaluating a company that you would like to invest on, which non-financial factors would you consider?	Brand recognition Records on-time delivery and operational uptime Standing of the business in the community Company reputation for quality Reported customer satisfaction None of the above All of the above
Petron has P6,000,000 in sales. Its Return on Equity is 12% and its total assets turnover is 3.2 times. The company is 50% equity financed. What is its net income?
When comparing current financial ratios to earlier years, you find that the company has an improving current ratio and a deteriorating acid-test ratio. Given these results, it would be logical for the management to:	Work in suppliers to reduce inventory sales Offer cash discounts for early payment on accounts receivable Increase budget controls so that expense are reduces Reduce long term debt by issuing new stock
Which of the following is not a consideration bearing on the quality and stability of the sales and revenue trend?	Degree on geographical diversification of markets Degree of customer concentration and dependence on a single industry Elasticity of supply for products Ability of the business to anticipate demands trends by the introduction pf new products and services. Degree of dependence relatively few leading sales associates
Which of the following transactions would increase the current ratio and decrease net profit?	A long term bond is retired before maturity at a discount The firm declares a stock dividend Vacant is sold for less than net book value Uncollectible accounts receivable are written off against the allowance account
Which one of the following elements of the financial statements may be modified or not included in the investment base?	Unproductive assets Shareholders' equity Depreciable assets Preferred stockholder' book value