Quiz2 Practice
8
eedback — Module two practice quiz - This quiz does not contribute to your final gradeHelp Center You submitted this quiz on Tue 7 Jul 2015 4:49 AM PDT. You got a score of 10.00 out of 10.00. Module 2 practice quiz - This quiz does not contribute to your final grade. You can attempt this quiz as many times as you wish for practice purposes. Question 1 Operating margin measures the: Your Answer Score Operating income Gross sales of the firm Firms ability to sell a product for more than the direct and indirect costs of production Corre ct 1.00 Firms ability to sell a product
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Corp Finance Quiz 2 Practice
Transcript of Quiz2 Practice
eedback — Module two practice quiz - This quiz does
not contribute to your final gradeHelp Center
You submitted this quiz on Tue 7 Jul 2015 4:49 AM PDT. You got a score of 10.00 out of 10.00.
Module 2 practice quiz - This quiz does not contribute to your final grade.
You can attempt this quiz as many times as you wish for practice purposes.
Question 1
Operating margin measures the:
Your Answer Score
Operating income
Gross sales of the firm
Firms ability to sell a product for more than the direct and indirect costs of production
Corre
ct
1.00
Firms ability to sell a product
Total 1.00 / 1.00
Question 2
Why do analysts often prefer to use ROA rather than ROE in their analysis?
Your Answer Score Explanation
ROE includes equity
Assets are more important than equity
It is not as sensitive to the firm’s choice of leverage
Correct 1.00 Correct
ROA includes assets
Total 1.00 / 1.00
Question 3
When would Price/Earnings ratio equal earnings per share?
Your Answer Score Explanation
Always
Only when share price equals EPS
Never
Only when net income equals market capitalization
Correct 1.00 Correct
Total 1.00 / 1.00
Question 4
A ‘fast-track’ analyst price/earnings forecast depends crucially on:
Your Answer Score Explanation
Where the company operates
The stability of the Price/Earnings ratio
Correct 1.00 Correct
The analyst who forecasted the Price/Earnings ratio
Whether the company just listed or not
Total 1.00 / 1.00
Question 5
Debt investors generally want the firm to:
Your Answer Score
invest only in risk-free assets
invest in projects that are not too risky relative to the average risk of projects in place
Invest in very risky projects
Avoid risky projects
Corre
ct
1.00
Total 1.00 / 1.00
Question 6
If the interest coverage ratio increases from one year to the next, the interest expense for the firm
must have fallen.
Your Answer Score Explanation
True
False
Correct 1.00 Correct
Total 1.00 / 1.00
Question 7
What do we divide cost of goods sold by in order to estimate a firm’s inventory turnover?
Your Answer Score Explanation
Sales
(average) Inventory
Correct 1.00
Cost of goods sold
365
Total 1.00 / 1.00
Question 8
What is divided by the accounts receivable ratio in order to estimate a firm’s average collection
period (in days)?
Your Answer Score Explanation
Accounts receivable turnover
Sales
(average) Accounts receivable
365
Correct 1.00 Correct
Total 1.00 / 1.00
Question 9
The quick ratio equals:
Your Answer Score Explanation
(Cash and near cash)/Current liabilities
Correct 1.00 Correct
Current assets/Current liabilities
Gross profit/Sales
Sales/Total assets
Total 1.00 / 1.00
Question 10
What is a potential drawback of liquidity measures?
Your Answer Score Explanation
They only take into account cash transactions
They don’t take into account non-current assets
They don’t take into account non-current liabilities
They don’t take into account cash generated by ongoing operations
Correct 1.00 Correct
Total 1.00 / 1.00
