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chapter 2 analytical Flashcards

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1
Q

the above diagram shows a balance sheet for a certain company. all quantities shown are in millions of dollars. what is the company’s net working capital?

A

$45 million

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2
Q

the above diagram shows a balance sheet for a certain company. if the company pays back all of its accounts payable today using cash, what will its net working capital be?

A

$45 million

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3
Q

the above diagram shows a balance sheet for a certain company. if the company buys new property, plant and equipment today using its entire cash balance, what will its net working capital be?

A

-$12 million

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4
Q

the above diagram shows a balance sheet for a certain company. all quantities are shown in millions of dollars. how would the balance sheet change if the company’s long-term assets were judged to depreciate at an extra $5 million per year?

A

net property, plant and equipment would fall to $116 million, and total assets and stockholders’ equity would be adjusted accordingly

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5
Q

the above diagram shows a balance sheet for a certain company. all quantities are shown in millions of dollars. if the company has 5 million shares outstanding, and these shares are trading at a price of $6.39 per share, what does this tell you about how investors view this firm’s book value?

A

investors consider that the firm’s market value and its book value are roughly equivalent

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6
Q

refer to the balance sheet above. what is luther’s net working capital in 2006?

A

$16.8 million

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7
Q

refer to the balance sheet above. if in 2006 luther has 10.2 million shares outstanding and these share are trading $16 per share, then luther’s market-to-book ratio would be closest to ?

A

1.29

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8
Q

refer to the balance sheet above. when using the book value of equity, the debt-equity ratio for luther in 2006 is closest to ?

A

2.25

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9
Q

refer to the balance sheet above. if in 2006 luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then using the market value of equity, the debt-equity ratio for luther in 2006 is closest to ?

A

1.72

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10
Q

refer to the balance sheet above. if in 2006 luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then what is luther’s enterprise value?

A

$385.7 million

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11
Q

refer to the balance sheet above. luther’s current ratio for 2006 is closest to ?

A

1.11

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12
Q

refer to the balance sheet above. luther’s quick ratio for 2006 is closest to ?

A

0.87

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13
Q

refer to the balance sheet above. the change in luther’s quick ratio from 2005 to 2006 is closest to ?

A

an increase of 0.01

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14
Q

a public company has a book value of $128 million. they have 20 million shares outstanding, with a market price of $4 per share. which of the following statements is true regarding this company?

A

investors believe the company’s assets are not likely to be profitable since its market value is worth less than its book value

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15
Q

GenCorp. has a total debt of $140 million and stockholders’ equity of $50 million. it also has 26 million shares outstanding, with a market price of $4 per share. what is GenCorp’s market debt-equity ratio?

A

1.35

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16
Q

a company has a share price of $22.15 and 118 million shares outstanding. its market-to-book ratio is 4.2, its book debt-equity ratio is 3.2, and it has cash of $800 million. how much would it cost to take over this business assuming you pay its enterprise value?

A

$3.8 billion

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17
Q

convex industries has inventories of $218 million, current assets of $1.4 billion, and current liabilities of $504 million. what is its quick ratio?

A

2.35

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18
Q

company A has current assets of $42 billion, and current liabilities of $41 billion. company B has current assets of $2.7 billion and current liabilities of $1.8 billion. which of the following statements is correct, based on this information?

A

company A is less likely than company B to have sufficient working capital to meet its short term needs

19
Q

if the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in the balance sheet between 2007 and 2008?

A

the company is having difficulties selling its product

20
Q

if the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in stockholders’ equity between 2007 and 2008?

A

the company’s net income in 2008 was negative

21
Q

if the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2007 and 2008?

A

the company has increased the risk that it will experience a cash shortfall in the near future

22
Q

if the above balance sheet is for a retail company, how has the company’s leverage changed between 2007 and 2008?

A

the company has experienced a significant increase in its leverage

23
Q

consider the above income statement for xenon manufacturing. all values are in millions of dollars. if xenon manufacturing has 20 million shares outstanding, what is its EPS in 2008?

A

$0.50

24
Q

consider the above income statement for CharmCorp. all values are in millions of dollars. if CharmCorp has 4 million shares outstanding, and its managers and employees have stock options for 2 million shares, what is its diluted EPS in 2008?

A

$1.67

25
Q

refer to the income statement above. for the year ending December 31, 2006 luther’s earnings per share is closest to ?

A

$1.03

26
Q

refer to the income statement above. assuming that luther has no convertible bonds outstanding, then for the year ending December 31, 2006 luther’s diluted earnings per share are closest to ?

A

$1.03

27
Q

refer to the income statement above. luther’s operating margin for the year ending December 31, 2005 is closest to ?

A

20.36%

28
Q

refer to the income statement above. luther’s net profit margin for the year ending December 31, 2005 is closest to ?

A

11.61%

29
Q

refer to the income statement above. luther’s earnings before interest, taxes, depreciation, and amortization for the year ending December 31,2005 is closest to ?

A

$135.9 million

30
Q

refer to the income statement above. luther’s return on equity for the year ending December 31, 2005 is closest to ?

A

123.56%

31
Q

refer to the income statement above. luther’s return on assets for the year ending December 31, 2005 is closest to ?

A

17.43%

32
Q

consider the above income statement for xenon manufacturing. all values are in millions of dollars. calculate the operating margin for 2008 and 2009. what does the change in the operating margin between these two years imply about the company?

A

the efficiency of xenon manufacturing has significantly fallen between 2008 and 2009.

33
Q

consider the above income statement for xenon manufacturing. all values are in millions of dollars. calculate the gross margin for 2008 and 2009. what does this change in the gross margin between these two years imply about the company?

A

the ability of xenon manufacturing to sell its goods and services for more than the costs of producing them fell between 2008 and 2009

34
Q

in 2009, an agricultural company introduced a new cropping process which reduced the cost of growing some of its crops. if sales in 2008 and 2009 were steady at $30 million, but the gross margin increased from 2.8% to 3.9% between those years, by what amount was the cost of sales reduced?

A

$330,000

35
Q

above are portions of the balance sheet and income statement for two companies in 2008. based upon this information, which of the following statements is most likely to be true?

A

fixed asset turnover ratios indicate that firm A generating fewer sales for the assets it employs than firm B

36
Q

the balance sheet and income statement of a particular firm are shown above. what does the account receivable days ratio tell you about this company?

A

it takes on average about 4 weeks to collect payment from its customers

37
Q

which of the following is the LEAST likely explanation for a firm’s high ROE?

A

the firm is growing

38
Q

manufacturer A has a profit margin of 2.2%, an asset turnover of 1.7 and an equity multiplier of 5. manufacturer B has a profit margin of 2.5%, an asset turnover of 1.2 and an equity multiplier of 4.7. How much asset turnover should manufacture B have to match manufacturer A’s ROE?

A

1.59%

39
Q

the above data is for four regional trucking firms. based on price-earnings ratios, which firm’s stock is the best value?

A

firm B

40
Q

consider the above statement of cash flows. if all amounts shown above are in millions of dollars, what were AOS industries’ retained earnings for 2008?

A

$2.2 million

41
Q

consider the above statement of cash flows. what were AOS industries’ major means of raising money in 2008?

A

by issuing debt

42
Q

consider the above statement of cash flows. which of the following is true of AOS industries’ operating cash flows?

A

all of the above are true

43
Q

consider the above statement of cash flows. in 2008, AOS industries had contemplated buying a new warehouse for $3 million, the cost of which would be depreciated over 10 years. if AOS industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at the end of the 2008?

A

it would have $2,925,000 less cash at the end of 2008

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