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Multiple Choice Quiz
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1
Of the following assets, which is generally the most liquid?
A)Accounts receivable
B)Inventory
C)Goodwill
D)Both A and B
2
Intangible fixed assets would include:
A)Building
B)Machinery
C)Trademarks
D)Equipment
3
Net working capital (NWC) is calculated as:
A)Total assets − total liabilities
B)Current assets + current liabilities
C)Current assets − current liabilities
D)Total assets + total liabilities
4
Which of the following is an example of liquidity ratios?
A)Times interest earned (TIE)
B)Quick ratio
C)Return on equity
D)Tobin's q
5
If the long-term debt is 10,758 and the equity is 17,898, what is the long-term debt-equity ratio?
A)28%
B)60%
C)57%
D)2%
6
Given that the cost of goods sold is 46,133 and the inventory at the start of the year is 10,625, what is the inventory turnover?
A)4.3
B)0.9375
C)1.33
D)1.0625
7
The denominator in the Quick ratio is
A)Cash
B)Short term securities
C)Receivables
D)Current liabilities
8
Which of the following statements is true?
A)Corporate financial models are usually based on accounting concepts.
B)Corporate financial models usually calculate the NPV of the firm's investment plan.
C)Corporate financial models usually calculate the firm's optimal debt ratio.
D)All of these options.
9
A company's stakeholders can be :
A)Stockholders
B)Suppliers
C)Government and community
D)All of these options
10
Which of the following is not a fixed asset?
A)Property
B)Plant
C)Inventory
D)Equipment
11
EBIT is calculated as:
A)Total revenue − cost − depreciation
B)Total revenue − cost + depreciation
C)Total revenue − cost − interest
D)None of these options
12
Return-on-assets equals:
A)(EBIT + tax)/average total assets
B)(EBIT − tax)/average total assets
C)(EBIT − depreciation)/average total assets
D)(EBIT + depreciation)/average total assets
13
Suppose AD Inc. has 200 million in sales, 150 million in assets at the end of the year, and 120 million in assets at the beginning of the year. The firm's asset turnover ratio is:
A)1.48
B).74
C)1.95
D)Not enough information
14
The Dupont system
A)Links profitability and efficiency ratios
B)Considers that ROA and ROE can be thought of as being comprised of several ratios
C)Provides information about the interaction of ratios
D)All of these options
15
When a firm improves its average collection period it generally:
A)Requires additional cash investment in inventory
B)Releases cash locked up in accounts receivables
C)Does not alter its cash position
D)Cannot reduce its inventories





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