Week 2 wiley practice quiz fin 571

It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm.

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Multiple Choice Question 68

Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio?

 

 

Multiple Choice Question 68

Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars.

$1,715 million

$1,651 million

$1,191 million

$1,421 million

 

 

Multiple Choice Question 46

Coverage ratios, like times interest earned and cash coverage ratio, allow

a firm’s creditors to assess how well the firm will meet its interest obligations.

a firm’s creditors to assess how well the firm will meet its short-term liabilities other than interest expense.

a firm’s management to assess how well they meet short-term liabilities.

a firm’s shareholders to assess how well the firm will meet its short-term liabilities.

 

 

Multiple Choice Question 54

Peer group analysis can be performed by

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a) management choosing a set of firms that are similar in size or sales, or who compete in the same market.

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b) using the average ratios of this peer group, which would then be used as the benchmark.

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c) identifying firms in the same industry that are grouped by size, sales, and product lines, in order to establish benchmark ratios.

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d) Only a and b relate to peer group analysis.

 

 

Multiple Choice Question 61

Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales of $3,436,812, what is its level of receivables?

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