art 1 of 1 – Week 1 Quiz |
The firm’s price-earnings (P/E) ratio is influenced by its
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Question 2 of 25 |
4.0 Points |
The primary disadvantage of accrual accounting is that
A.it does not match revenues and expenses in the period in which they are incurred. |
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B.it does not appropriately measure accounting profit. |
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C.it does not recognize accounts receivable. |
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D.it does not adequately show the actual cash flow position of the firm
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Gross profit is equal to
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Question 5 of 25 |
4.0 Points |
The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.
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uestion 6 of 25 |
4.0 Points |
Ratios are used to compare different firms in the same industry.
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The Sarbanes-Oxley Act was passed in an effort to
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uestion 8 of 25 |
4.0 Points |
Which of the following is not subtracted out in arriving at operating income?
A.interest expense |
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B.cost of goods sold |
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C.depreciation |
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D.selling and administrative expense |
Question 9 of 25 |
4.0 Points |
Which of the following is not a primary source of capital to the firm?
A.assets |
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B.common stock |
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C.preferred stock |
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D.bonds |
Question 10 of 25 |
4.0 Points |
A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?
A.$35 per share |
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B.$25 per share |
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C.$15 per share |
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D.Not enough information to tell |
Question 11 of 25 |
4.0 Points |
Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.
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uestion 12 of 25 |
4.0 Points |
A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of
A.$60.00 |
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B.$15.00 |
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C.$6.67 |
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D.the market assigns a stock price independent of EPS and the P/E ratio. |
Question 13 of 25 |
4.0 Points |
The P/E ratio is strongly related to the past performance of the firm.
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Question 14 of 25 |
4.0 Points |
Money markets would include which of the following securities?
A.common stock and corporate bonds. |
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B.treasury bills and commercial paper. |
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C.certificates of deposit and preferred stock. |
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D.all of these. |
uestion 15 of 25 |
4.0 Points |
Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.
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Question 16 of 25 |
4.0 Points |
Preferred stock is excluded from stockholders equity because it does not have full voting rights.
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Question 17 of 25 |
4.0 Points |
Sales minus cost of goods sold is equal to earnings before taxes.
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Question 20 of 25 |
4.0 Points |
Asset utilization ratios relate balance sheet assets to income statement sales.
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Question 21 of 25 |
4.0 Points |
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Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.
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Question 22 of 25 |
4.0 Points |
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Which of the following is an outflow of cash?
A.profitable operations |
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B.the sale of equipment |
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C.the sale of the company’s common stock |
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D.the payment of cash dividends |
uestion 23 of 25 |
4.0 Points |
The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:
A.40% |
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B.12% |
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C.20% |
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D.25% |
Question 24 of 25 |
4.0 Points |
The income statement is the major device for measuring the profitability of a firm over a period of time.
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Question 25 of 25 |
4.0 Points |
Which of the following is an inflow of cash?
A.funds spent in normal business operations |
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B.the purchase of a new factory |
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C.the sale of the firm’s bonds |
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D.the retirement of the firm’s bonds |