The XXX Corporation: Balance Sheet, 2018

Cash & marketable securities

$200

Accounts payable

100

Accounts receivable

150

Notes payable

100

Inventories

250

Total current liabilities

$200

Total current assets

$600

Long-term debt

400

Total liabilities

$600

Fixed assets

900

Common stock

50

Retained earnings

850

Total equity

$900

Total assets

$1,500 Total liabilities and equity

$1,500

The XXX Corporation: Income Statement, 2018

Sales revenue

$1,200

Cost of goods sold

700

Selling expenses

200

Depreciation

150

Earnings before interest and taxes

$150

Interest paid

50

Taxable income

$100

Taxes (40%)

40

Net income

$60

1. The quick ratio is:

0.57 B. 1.75 C. 3.0 D. 1.25 E. 0.80

2. The equity multiplier is:

1.67 B. 0.60 C. 0.40 D. 1.50 E. 0.67

3. The net profit margin is:

A. 0.05 B. 0.15 C. 0.60 D. 0.50 E. 0.12

4. The operating cash flow for 2018 was ____ million.

A. +$60 B. -$60 C. +$260 D. +$160 E. +$100

5. The current market price of XXX is $30 per share. The price earnings ratio is 25. The number of

shares outstanding is _______ million.

A. 10 B. 20 C. 30 D. 40 E. 50

6. The total asset turnover ratio is:

A. 0.8 B. 1.25 C. 2.0 D. 4.0 E. 6.0

7. If XXX were to acquire $50 million in inventory with a $50 million increase in accounts payable (other

things equal), the current ratio would _____, and the quick ratio would _____.

A. increase, increase

B. not change, decrease

C. not change, not change

D. decrease, increase

E. decrease, decrease

Examine the financial statements below. Use this information to answer questions 1-7. Note: All figures are in millions of dollars. The XXX Corporation: Balance Sheet, 2018 Cash & marketable securities $200 150 Accounts payable 100 Accounts receivable Notes payable 100 Inventories 250 Total current liabilities $200 Total current assets $600 Long-term debt 400 Total liabilities $600 Fixed assets 900 Common stock 50 Retained earnings 850 Total equity $900 Total assets $1,500 Total liabilities and equity $1,500 The XXX Corporation: Income Statement, 2018 Sales revenue $1,200 Cost of goods sold 700 Selling expenses 200 Depreciation 150 Earnings before interest and taxes $150 Interest paid 50 Taxable income $100 Taxes (40%) 40 Net income $60 1. The quick ratio is: 0.57 B. 1.75 C. 3.0 D. 1.25 E. 0.80 2. The equity multiplier is: 1.67 B. 0.60 C. 0.40 D. 1.50 E. 0.67 3. The net profit margin is: A. 0.05 B. 0.15 C. 0.60 D. 0.50 E. 0.12 4. The operating cash flow for 2018 was million. A. +$60 B. -$60 C. +$260 D. +$160 E. +$100 5. The current market price of XXX is $30 per share. The price earnings ratio is 25. The number of shares outstanding is million. A. 10 B. 20 C. 30 D. 40 E. 50 6. The total asset turnover ratio is: A. 0.8 B. 1.25 C. 2.0 D. 4.0 E. 6.0 7. If XXX were to acquire $50 million in inventory with a $50 million increase in accounts payable (other things equal), the current ratio would , and the quick ratio would A. increase, increase B. not change, decrease C. not change, not change D. decrease, increase E. decrease, decrease