Chapter3 Analysis of cash flows

Chapter 03 Financial Statements Analysis and Long-Term Planning Answer KeyMultiple Choice Questions1. One key reason a long-term financial plan is developed is because:A. the plan determines your financial policy.B. the plan determines your investment policy.C. there are direct connections between achievable corporate growth and the financial policy.D. there is unlimited growth possible in a well-developed financial plan.E. None of the above.Difficulty level: EasyTopic: LONG-TERM PLANNINGType: DEFINITIONSc2. Projected future financial statements are called:A. plug statements.B. pro forma statements.C. reconciled statements.D. aggregated statements.E. none of the above.Difficulty level: Easy Topic: PRO FORMA STATEMENTS Type: DEFINITIONSB3. The percentage of sales method:A. requires that all accounts grow at the same rate.B. separates accounts that vary with sales and those that do not vary with sales.C. allows the analyst to calculate how much financing the firm will need to support the predicted sales level.D. Both A and B.E. Both B and C.Difficulty level: MediumTopic: PERCENTAGE OF SALESType: DEFINITIONSE4. A _____ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively.A. tax reconciliation statementB. statement of standardizationC. statement of cash flowsD. common-base year statementE. common-size statementDifficulty level: EasyTopic: COMMON-SIZE STATEMENTSType: DEFINITIONSE5. Relationships determined from a firm's financial information and used for comparison purposes are known as:A. financial ratios.B. comparison statements.C. dimensional analysis.D. scenario analysis.E. solvency analysis.ADifficulty level: EasyTopic: FINANCIAL RATIOSType: DEFINITIONS6. Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as _____ ratios.A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: SHORT-TERM SOLVENCY RATIOSType: DEFINITIONSC7. The current ratio is measured as:A. current assets minus current liabilities.B. current assets divided by current liabilities.C. current liabilities minus inventory, divided by current assets.D. cash on hand divided by current liabilities.E. current liabilities divided by current assets.Difficulty level: EasyTopic: CURRENT RATIOType: DEFINITIONSB8. The quick ratio is measured as:A. current assets divided by current liabilities.B. cash on hand plus current liabilities, divided by current assets.C. current liabilities divided by current assets, plus inventory.D. current assets minus inventory, divided by current liabilities.E. current assets minus inventory minus current liabilities.Difficulty level: EasyTopic: QUICK RATIOType: DEFINITIONSD9. The cash ratio is measured as:A. current assets divided by current liabilities.B. current assets minus cash on hand, divided by current liabilities.C. current liabilities plus current assets, divided by cash on hand.D. cash on hand plus inventory, divided by current liabilities.E. cash on hand divided by current liabilities.Difficulty level: MediumTopic: CASH RATIOType: DEFINITIONSE10. Ratios that measure a firm's financial leverage are known as _____ ratios.A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONSB11. The financial ratio measured as total assets minus total equity, divided by total assets, is the:A. total debt ratio.B. equity multiplier.C. debt-equity ratio.D. current ratio.E. times interest earned ratio.Difficulty level: EasyTopic: TOTAL DEBT RATIOType: DEFINITIONSA12. The debt-equity ratio is measured as total:A. equity minus total debt.B. equity divided by total debt.C. debt divided by total equity.D. debt plus total equity.E. debt minus total assets, divided by total equity.Difficulty level: EasyTopic: DEBT-EQUITY RATIOType: DEFINITIONSC13. The equity multiplier ratio is measured as total:A. equity divided by total assets.B. equity plus total debt.C. assets minus total equity, divided by total assets.D. assets plus total equity, divided by total debt.E. assets divided by total equity.Difficulty level: MediumTopic: EQUITY MULTIPLIERType: DEFINITIONS14. The financial ratio measured as earnings before interest and taxes, divided by interest expense is the:A. cash coverage ratio.B. debt-equity ratio.C. times interest earned ratio.D. gross margin.E. total debt ratio.Difficulty level: MediumTopic: TIMES INTEREST EARNED RATIOType: DEFINITIONS15. The financial ratio measured as earnings before interest and taxes, plus depreciation, divided by interest expense, is the:A. cash coverage ratio.B. debt-equity ratio.C. times interest earned ratio.D. gross margin.E. total debt ratio.Difficulty level: MediumTopic: CASH COVERAGE RATIOType: DEFINITIONS16. Ratios that measure how efficiently a firm uses its assets to generate sales are known as _____ ratios.A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS17. The inventory turnover ratio is measured as:A. total sales minus inventory.B. inventory times total sales.C. cost of goods sold divided by inventory.D. inventory times cost of goods sold.E. inventory plus cost of goods sold.D ifficulty level: MediumTopic: INVENTORY TURNOVERType: DEFINITIONS18. The financial ratio days' sales in inventory is measured as:A. inventory turnover plus 365 days.B. inventory times 365 days.C. inventory plus cost of goods sold, divided by 365 days.D. 365 days divided by the inventory.E. 365 days divided by the inventory turnover.Difficulty level: MediumTopic: DAYS' SALES IN INVENTORYType: DEFINITIONS19. The receivables turnover ratio is measured as:A. sales plus accounts receivable.B. sales divided by accounts receivable.C. sales minus accounts receivable, divided by sales.D. accounts receivable times sales.E. accounts receivable divided by sales.Difficulty level: MediumTopic: RECEIVABLES TURNOVERType: DEFINITIONS20. The financial ratio days' sales in receivables is measured as:A. receivables turnover plus 365 days.B. accounts receivable times 365 days.C. accounts receivable plus sales, divided by 365 days.D. 365 days divided by the receivables turnover.E. 365 days divided by the accounts receivable.Difficulty level: MediumTopic: DAYS' SALES IN RECEIVABLES Type: DEFINITIONS21. The total asset turnover ratio is measured as:A. sales minus total assets.B. sales divided by total assets.C. sales times total assets.D. total assets divided by sales.E. total assets plus sales.Difficulty level: EasyTopic: TOTAL ASSET TURNOVERType: DEFINITIONS22. Ratios that measure how efficiently a firm's management uses its assets and equity to generate bottom line net income are known as _____ ratios.A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: PROFITABILITY RATIOSType: DEFINITIONS23. The financial ratio measured as net income divided by sales is known as the firm's:A. profit margin.B. return on assets.C. return on equity.D. asset turnover.E. earnings before interest and taxes.Difficulty level: EasyTopic: PROFIT MARGINType: DEFINITIONS24. The financial ratio measured as net income divided by total assets is known as the firm's:A. profit margin.B. return on assets.C. return on equity.D. asset turnover.E. earnings before interest and taxes.Difficulty level: EasyTopic: RETURN ON ASSETSType: DEFINITIONS25. The financial ratio measured as net income divided by total equity is known as the firm's:A. profit margin.B. return on assets.C. return on equity.D. asset turnover.E. earnings before interest and taxes.Difficulty level: EasyTopic: RETURN ON EQUITYType: DEFINITIONS26. The financial ratio measured as the price per share of stock divided by earnings per share is known as the:A. return on assets.B. return on equity.C. debt-equity ratio.D. price-earnings ratio.E. Du Pont identity.Difficulty level: EasyTopic: PRICE-EARNINGS RATIOType: DEFINITIONS27. The market-to-book ratio is measured as:A. total equity divided by total assets.B. net income times market price per share of stock.C. net income divided by market price per share of stock.D. market price per share of stock divided by earnings per share.E. market value of equity per share divided by book value of equity per share.Difficulty level: MediumTopic: MARKET-TO-BOOK RATIOType: DEFINITIONS28. The _____ breaks down return on equity into three component parts.A. Du Pont identityB. return on assetsC. statement of cash flowsD. asset turnover ratioE. equity multiplierDifficulty level: MediumTopic: DU PONT IDENTITYType: DEFINITIONS29. The External Funds Needed (EFN) equation does not measure the:A. additional asset requirements given a change in sales.B. additional total liabilities raised given the change in sales.C. rate of return to shareholders given the change in sales.D. net income expected to be earned given the change in sales.E. None of the above.Difficulty level: Medium Topic: EXTERNAL FUNDS NEEDED Type: DEFINITIONS30. To calculate sustainable growth rate without using return on equity, the analyst needs the:A. profit margin.B. payout ratio.C. debt-to-equity ratio.D. total asset turnover.E. All of the above.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS31. Growth can be reconciled with the goal of maximizing firm value:A. because greater growth always adds to value.B. because growth must be an outcome of decisions that maximize NPV.C. because growth and wealth maximization are the same.D. because growth of any type cannot decrease value.E. None of the above.Difficulty level: MediumTopic: GROWTHType: DEFINITIONS32. Sustainable growth can be determined by the:A. profit margin, total asset turnover and the price to earnings ratio.B. profit margin, the payout ratio, the debt-to-equity ratio, and the asset requirement or asset turnover ratio.C. Total growth less capital gains growth.D. Either A or B.E. None of the above.Difficulty level: MediumTopic: SUSTAINABLE GROWTHType: DEFINITIONS33. Which of the following will increase sustainable growthA. Buy back existing stockB. Decrease debtC. Increase profit marginD. Increase asset requirement or asset turnover ratioE. Increase dividend payout ratioDifficulty level: MediumTopic: SUSTAINABLE GROWTHType: DEFINITIONS34. The main objective of long-term financial planning models is to:A. determine the asset requirements given the investment activities of the firm.B. plan for contingencies or uncertain events.C. determine the external financing needs.D. All of the above.E. None of the above.Difficulty level: MediumTopic: LONG-TERM PLANNINGType: DEFINITIONS35. On a common-size balance sheet, all _____ accounts are shown as a percentage of _____.A. income; total assetsB. liability; net incomeC. asset; salesD. liability; total assetsE. equity; salesDifficulty level: Medium Topic: COMMON-SIZE BALANCE SHEET Type: DEFINITIONS36. Which one of the following statements is correct concerning ratio analysisA. A single ratio is often computed differently by different individuals.B. Ratios do not address the problem of size differences among firms.C. Only a very limited number of ratios can be used for analytical purposes.D. Each ratio has a specific formula that is used consistently by all analysts.E. Ratios can not be used for comparison purposes over periods of time.Difficulty level: MediumTopic: RATIO ANALYSISType: DEFINITIONS37. Which of the following are liquidity ratios？I. cash coverage ratioII. current ratioIII. quick ratioIV. inventory turnoverA. II and III onlyB. I and II onlyC. II, III, and IV onlyD. I, III, and IV onlyE. I, II, III, and IVDifficulty level: MediumTopic: LIQUIDITY RATIOSType: DEFINITIONS38. An increase in which one of the following accounts increases a firm's current ratio without affecting its quick ratioA. accounts payableB. cashC. inventoryD. accounts receivableE. fixed assetsDifficulty level: MediumTopic: LIQUIDITY RATIOSType: DEFINITIONS39. A supplier, who requires payment within ten days, is most concerned with which one of the following ratios when granting creditA. currentB. cashC. debt-equityD. quickE. total debtDifficulty level: MediumTopic: LIQUIDITY RATIOSType: DEFINITIONS40. A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:A. $1 in equity.B. $1 in total sales.C. $1 in current assets.D. $.53 in equity.E. $.53 in total assets.Difficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS41. The long-term debt ratio is probably of most interest to a firm's:A. credit customers.B. employees.C. suppliers.D. mortgage holder.E. shareholders.Difficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS42. A banker considering loaning a firm money for ten years would most likely prefer the firm have a debt ratio of _____ and a times interest earned ratio of _____.A. .75; .75B. .50;C. .45;D. .40;E. .35;Difficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS43. From a cash flow position, which one of the following ratios best measuresa firm's ability to pay the interest on its debtsA. times interest earned ratioB. cash coverage ratioC. cash ratioD. quick ratioE. Interval measureDifficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS44. The higher the inventory turnover measure, the:A. faster a firm sells its inventory.B. faster a firm collects payment on its sales.C. longer it takes a firm to sell its inventory.D. greater the amount of inventory held by a firm.E. lesser the amount of inventory held by a firm.Difficulty level: MediumTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS45. Which one of the following statements is correct if a firm has a receivables turnover measure of 10A. It takes a firm 10 days to collect payment from its customers.B. It takes a firm days to sell its inventory and collect the payment from the sale.C. It takes a firm days to pay its creditors.D. The firm has an average collection period of days.E. The firm has ten times more in accounts receivable than it does in cash.Difficulty level: MediumTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS46. A total asset turnover measure of means that a firm has $ in:A. total assets for every $1 in cash.B. total assets for every $1 in total debt.C. total assets for every $1 in equity.D. sales for every $1 in total assets.E. long-term assets for every $1 in short-term assets.Difficulty level: MediumTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS47. Puffy's Pastries generates five cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5%.A. return on assetsB. return on equityC. profit marginD. Du Pont measureE. total asset turnoverDifficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS48. If a firm produces a 10% return on assets and also a 10% return on equity, then the firm:A. has no debt of any kind.B. is using its assets as efficiently as possible.C. has no net working capital.D. also has a current ratio of 10.E. has an equity multiplier of 2.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS49. If shareholders want to know how much profit a firm is making on their entire investment in the firm, the shareholders should look at the:A. profit margin.B. return on assets.C. return on equity.D. equity multiplier.E. earnings per share.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS50. BGL Enterprises increases its operating efficiency such that costs decrease while sales remain constant. As a result, given all else constant, the:A. return on equity will increase.B. return on assets will decrease.C. profit margin will decline.D. equity multiplier will decrease.E. price-earnings ratio will increase.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS51. The only difference between Joe's and Moe's is that Joe's has old, fully depreciated equipment. Moe's just purchased all new equipment which will be depreciated over eight years. Assuming all else equal:A. Joe's will have a lower profit margin.B. Joe's will have a lower return on equity.C. Moe's will have a higher net income.D. Moe's will have a lower profit margin.E. Moe's will have a higher return on assets.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS52. Last year, Alfred's Automotive had a price-earnings ratio of 15. This year, the price earnings ratio is 18. Based on this information, it can be stated with certainty that:A. the price per share increased.B. the earnings per share decreased.C. investors are paying a higher price for each share of stock purchased.D. investors are receiving a higher rate of return this year.E. either the price per share, the earnings per share, or both changed.Difficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS53. Turner's Inc. has a price-earnings ratio of 16. Alfred's Co. has a price-earnings ratio of 19. Thus, you can state with certainty that one share of stock in Alfred's:A. has a higher market price than one share of stock in Turner's.B. has a higher market price per dollar of earnings than does one share of Turner's.C. sells at a lower price per share than one share of Turner's.D. represents a larger percentage of firm ownership than does one share of Turner's stock.E. earns a greater profit per share than does one share of Turner's stock. Difficulty level: MediumTopic: MARKET VALUE RATIOType: DEFINITIONS54. Which two of the following are most apt to cause a firm to have a higher price-earnings ratio？I. slow industry outlookII. high prospect of firm growthIII. very low current earningsIV. investors with a low opinion of the firmA. I and II onlyB. II and III onlyC. II and IV onlyD. I and III onlyE. III and IV onlyDifficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS55. Vinnie's Motors has a market-to-book ratio of 3. The book value per share is $. Holding market-to-book constant, a $1 increase in the book value per share will:A. cause the accountants to increase the equity of the firm by an additional $2.B. increase the market price per share by $1.C. increase the market price per share by $12.D. tend to cause the market price per share to rise.E. only affect book values but not market values.Difficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS56. Which one of the following sets of ratios applies most directly to shareholdersA. return on assets and profit marginB. quick ratio and times interest earnedC. price-earnings ratio and debt-equity ratioD. market-to-book ratio and price-earnings ratioE. cash coverage ratio and times equity multiplierDifficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS57. The three parts of the Du Pont identity can be generally described as:I. operating efficiency, asset use efficiency and firm profitability.II. financial leverage, operating efficiency and asset use efficiency.III. the equity multiplier, the profit margin and the total asset turnover. IV. the debt-equity ratio, the capital intensity ratio and the profit margin.A. I and II onlyB. II and III onlyC. I and IV onlyD. I and III onlyE. III and IV onlyDifficulty level: MediumTopic: DU PONT IDENTITYType: DEFINITIONS58. If a firm decreases its operating costs, all else constant, then:A. the profit margin increases while the equity multiplier decreases.B. the return on assets increases while the return on equity decreases.C. the total asset turnover rate decreases while the profit margin increases.D. both the profit margin and the equity multiplier increase.E. both the return on assets and the return on equity increase.Difficulty level: MediumTopic: DU PONT IDENTITYType: DEFINITIONS59. Which one of the following statements is correctA. Book values should always be given precedence over market values.B. Financial statements are frequently the basis used for performance evaluations.C. Historical information has no value when predicting the future.D. Potential lenders place little value on financial statement information.E. Reviewing financial information over time has very limited value.Difficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS60. It is easier to evaluate a firm using its financial statements when the firm:A. is a conglomerate.B. is global in nature.C. uses the same accounting procedures as other firms in its industry.D. has a different fiscal year than other firms in its industry.E. tends to have one-time events such as asset sales and property acquisitions.Difficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS61. Which two of the following represent the most effective methods of directly evaluating the financial performance of a firm？I. comparing the current financial ratios to those of the same firm from prior time periodsII. comparing a firm's financial ratios to those of other firms in the firm's peer group who have similar operationsIII. comparing the financial statements of the firm to the financial statements of similar firms operating in other countriesIV. comparing the financial ratios of the firm to the average ratios of all firms located in the same geographic areaA. I and II onlyB. II and III onlyC. III and IV onlyD. I and IV onlyE. I and III onlyDifficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS62. In the financial planning model, external funds needed (EFN) is equal to changes inA. assets - (liabilities - equity).B. assets - (liabilities + equity).C. (assets + liabilities - equity).D. (assets + equity - liabilities).E. assets - equity.Difficulty level: MediumTopic: EXTERNAL FUNDS NEEDEDType: DEFINITIONS63. Which of the following represent problems encountered when comparing the financial statements of one firm with those of another firm？I. Either one, or both, of the firms may be conglomerates and thus have unrelated lines of business.II. The operations of the two firms may vary geographically.III. The firms may use differing accounting methods for inventory purposes. IV. The two firms may be seasonal in nature and have different fiscal year ends.A. I and II onlyB. II and III onlyC. I, III, and IV onlyD. I, II, and III onlyE. I, II, III, and IVDifficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS64. A firm's sustainable growth rate in sales directly depends on its:A. debt to equity ratio.B. profit margin.C. dividend policy.D. asset efficiency.E. All of the above.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS65. The sustainable growth rate will be equivalent to the internal growth rate when:A. a firm has no debt.B. the growth rate is positive.C. the plowback ratio is positive but less than 1.D. a firm has a debt-equity ratio exactly equal to 1.E. net income is greater than zero.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS66. The sustainable growth rate:A. assumes there is no external financing of any kind.B. is normally higher than the internal growth rate.C. assumes the debt-equity ratio is variable.D. is based on receiving additional external debt and equity financing.E. assumes that 100% of all income is retained by the firm.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS67. If a firm bases its growth projection on the rate of sustainable growth, and shows positive net income, then the:A. fixed assets will have to increase at the same rate, regardless of the current capacity level.B. number of common shares outstanding will increase at the same rate of growth.C. debt-equity ratio will have to increase.D. debt-equity ratio will remain constant while retained earnings increase.E. fixed assets, debt-equity ratio, and number of common shares outstanding will all increase.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS68. Marcie's Mercantile wants to maintain its current dividend policy, which isa payout ratio of 40%. The firm does not want to increase its equity financing but is willing to maintain its current debt-equity ratio. Given these requirements, the maximum rate at which Marcie's can grow is equal to:A. 40% of the internal rate of growth.B. 60% of the internal rate of growth.C. the internal rate of growth.D. the sustainable rate of growth.E. 60% of the sustainable rate of growth.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS69. One of the primary weaknesses of many financial planning models is that they:A. rely too much on financial relationships and too little on accounting relationships.B. are iterative in nature.C. ignore the goals and objectives of senior management.D. are based solely on best case assumptions.E. ignore the size, risk, and timing of cash flows.Difficulty level: MediumTopic: FINANCIAL PLANNING MODELSType: DEFINITIONS70. Financial planning, when properly executed:A. ignores the normal restraints encountered by a firm.B. ensures that the primary goals of senior management are fully achieved.C. reduces the necessity of daily management oversight of the business operations.D. helps ensure that proper financing is in place to support the desired level of growth.E. eliminates the need to plan more than one year in advance.。

企业会计准则2024中英对照Enterprise Accounting Standards 2024Chapter 1: General Principles1.1 Purpose and Basis1.2 Scope of ApplicationThis standard is applicable to all enterprises engaged in production or business activities in the People's Republic of China. The specific accounting treatment shall be determined based on the nature and size of the enterprise.Chapter 2: Accounting Assumptions2.1 Going Concern AssumptionEnterprises are assumed to continue operating in the foreseeable future. Therefore, accounting records and financial statements should be prepared on the basis of this assumption.2.2 Accrual Basis AssumptionTransactions and events are recorded based on their economic substance and are recognized in the accounting records and financial statements when they occur, rather than when cash is received or paid.Chapter 3: Recognition and Measurement of Assets, Liabilities, and Equity3.1 Recognition of AssetsAn asset should be recognized if it is probable that future economic benefits associated with the asset will flow to the enterprise and the cost or value of the asset can be reliably measured.3.2 Recognition of LiabilitiesA liability should be recognized if it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the obligation can be reliably measured.3.3 Measurement of AssetsAssets should be initially measured at cost. Subsequently, assets should be measured at cost less accumulated depreciation, impairment loss, or fair value if the fair value is reliably measurable.3.4 Measurement of LiabilitiesLiabilities should be measured at the amount of proceeds received or receivable in exchange for the obligation. If the amount received or receivable is not fair value, the present value of the future cash outflows should be used as the measurement basis.4.1 Revenue RecognitionRevenue should be recognized when it is probable that future economic benefits will flow to the enterprise, and the amount of revenue can be reliably measured.4.2 Expense RecognitionExpenses should be recognized when it is probable that an outflow of economic benefits will be required to settle the related obligations and the amount of the expense can bereliably measured.Chapter 5: Presentation and Disclosure of Financial Statements5.1 Balance SheetThe balance sheet should present the financial position of the enterprise at a particular date, presenting assets, liabilities, and equity.5.3 Statement of Cash FlowsThe statement of cash flows should provide information about the cash flows of the enterprise during a particular period, classified into operating activities, investing activities, and financing activities.Chapter 6: Consolidated Financial Statements6.1 Consolidation PrinciplesConsolidated financial statements should be prepared when an enterprise has control over another entity or entities.6.2 Consolidation Procedures7.1 Acquisition Method7.2 Goodwill。

Chapter 03 Financial Statements Analysis and Long-Term Planning Answer Key Multiple Choice Questions1. One key reason a long-term financial plan is developed is because: A. the plan determines your financial policy.B. the plan determines your investment policy.C. there are direct connections between achievable corporate growth and the financial policy.D. there is unlimited growth possible in a well-developed financial plan.E. None of the above.Difficulty level: EasyTopic: LONG-TERM PLANNINGType: DEFINITIONS c2. Projected future financial statements are called: A. plug statements.B. pro forma statements.C. reconciledstatements.D. aggregated statements.E. none of the above.Difficulty level: EasyTopic: PRO FORMA STATEMENTSType: DEFINITIONS B3. The percentage of sales method: A. requires that all accounts grow at the same rate.B. separates accounts that vary with sales and those that do not vary with sales.C. allows the analyst to calculate how much financing the firm will need to support the predicted sales level.D. Both A and B.E. Both B and C.Difficulty level: MediumTopic: PERCENTAGE OF SALESType: DEFINITIONS E4. A _____ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. A. tax reconciliation statementB. statement of standardizationC. statement of cash flowsD. common-base year statementE. common-size statementDifficulty level: EasyTopic: COMMON-SIZE STATEMENTSType: DEFINITIONS E5. Relationships determined from a firm's financial information and used for comparison purposes are known as: A. financial ratios.B. comparison statements.C. dimensional analysis.D. scenario analysis.E. solvency analysis.ADifficulty level: EasyTopic: FINANCIAL RATIOSType: DEFINITIONS6. Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as _____ ratios. A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: SHORT-TERM SOLVENCY RATIOSType: DEFINITIONS C7. The current ratio is measured as: A. current assets minus current liabilities.B. current assets divided by current liabilities.C. current liabilities minus inventory, divided by current assets.D. cash on hand divided by current liabilities.E. current liabilities divided by current assets.Difficulty level: EasyTopic: CURRENT RATIOType: DEFINITIONS B8. The quick ratio is measured as: A. current assets divided by current liabilities.B. cash on hand plus current liabilities, divided by current assets.C. current liabilities divided by current assets, plus inventory.D. current assets minus inventory, divided by current liabilities.E. current assets minus inventory minus current liabilities.Difficulty level: EasyTopic: QUICK RATIOType: DEFINITIONS D9. The cash ratio is measured as: A. current assets divided by current liabilities.B. current assets minus cash on hand, divided by current liabilities.C. current liabilities plus current assets, divided by cash on hand.D. cash on hand plus inventory, divided by current liabilities.E. cash on hand divided by current liabilities.Difficulty level: MediumTopic: CASH RATIOType: DEFINITIONS E10. Ratios that measure a firm's financial leverage are known as _____ ratios. A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS B11. The financial ratio measured as total assets minus total equity, divided by total assets, is the: A. total debt ratio.B. equity multiplier.C. debt-equity ratio.D. current ratio.E. times interest earned ratio.Difficulty level: EasyTopic: TOTAL DEBT RATIOType: DEFINITIONSA12. The debt-equity ratio is measured as total: A. equity minus total debt.B. equity divided by total debt.C. debt divided by total equity.D. debt plus total equity.E. debt minus total assets, divided by total equity.Difficulty level: EasyTopic: DEBT-EQUITY RATIOType: DEFINITIONS C13. The equity multiplier ratio is measured as total: A. equity divided by total assets.B. equity plus total debt.C. assets minus total equity, divided by total assets.D. assets plus total equity, divided by total debt.E. assets divided by total equity.Difficulty level: MediumTopic: EQUITY MULTIPLIERType: DEFINITIONS 14. The financial ratio measured as earnings before interest and taxes, divided by interest expense is the: A. cash coverage ratio.B. debt-equity ratio.C. times interest earned ratio.D. gross margin.E. total debt ratio.Difficulty level: MediumTopic: TIMES INTEREST EARNED RATIOType: DEFINITIONS15. The financial ratio measured as earnings before interest and taxes, plus depreciation, divided by interest expense, is the: A. cash coverage ratio.B. debt-equity ratio.C. times interest earned ratio.D. gross margin.E. total debt ratio.Difficulty level: MediumTopic: CASH COVERAGE RATIOType: DEFINITIONS 16. Ratios that measure how efficiently a firm uses its assets to generate sales are known as _____ ratios. A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market valueDifficulty level: EasyTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS 17. The inventory turnover ratio is measured as: A. total sales minus inventory.B. inventory times total sales.C. cost of goods sold divided by inventory.D. inventory times cost of goods sold.E. inventory plus cost of goods sold.D ifficulty level: MediumTopic: INVENTORY TURNOVERType: DEFINITIONS18. The financial ratio days' sales in inventory is measured as: A. inventory turnover plus 365 days.B. inventory times 365 days.C. inventory plus cost of goods sold, divided by 365 days.D. 365 days divided by the inventory.E. 365 days divided by the inventory turnover.Difficulty level: MediumTopic: DAYS' SALES IN INVENTORYType: DEFINITIONS 19. The receivables turnover ratio is measured as: A. sales plus accounts receivable.B. sales divided by accounts receivable.C. sales minus accounts receivable, divided by sales.D. accounts receivable times sales.E. accounts receivable divided by sales.Difficulty level: MediumTopic: RECEIVABLES TURNOVERType: DEFINITIONS 20. The financial ratio days' sales in receivables is measured as: A. receivables turnover plus 365 days.B. accounts receivable times 365 days.C. accounts receivable plus sales, divided by 365 days.D. 365 days divided by the receivables turnover.E. 365 days divided by the accounts receivable.Difficulty level: MediumTopic: DAYS' SALES IN RECEIVABLESType: DEFINITIONS21. The total asset turnover ratio is measured as: A. sales minus total assets.B. sales divided by total assets.C. sales times total assets.D. total assets divided by sales.E. total assets plus sales.Difficulty level: EasyTopic: TOTAL ASSET TURNOVERType: DEFINITIONS 22. Ratios that measure how efficiently a firm's management uses its assets and equity to generate bottom line net income are known as _____ ratios. A. asset managementB. long-term solvencyC. short-term solvencyD. profitabilityE. market value Difficulty level: EasyTopic: PROFITABILITY RATIOSType: DEFINITIONS 23. The financial ratio measured as net income divided by sales is known as the firm's: A. profit margin.B. return on assets.C. return on equity.D. asset turnover.E. earnings before interest and taxes.Difficulty level: EasyTopic: PROFIT MARGINType: DEFINITIONS24. The financial ratio measured as net income divided by total assets is known as the firm's: A. profit margin.B. return on assets.C. return on equity.D. asset turnover.E. earnings before interest and taxes.Difficulty level: EasyTopic: RETURN ON ASSETSType: DEFINITIONS 25. The financial ratio measured as net income divided by total equity is known as the firm's: A. profit margin.B. return on assets.C. return on equity.D. asset turnover.E. earnings before interest and taxes.Difficulty level: EasyTopic: RETURN ON EQUITYType: DEFINITIONS 26. The financial ratio measured as the price per share of stock divided by earnings per share is known as the: A. return on assets.B. return on equity.C. debt-equity ratio.D. price-earnings ratio.E. Du Pont identity.Difficulty level: EasyTopic: PRICE-EARNINGS RATIOType: DEFINITIONS27. The market-to-book ratio is measured as: A. total equity divided by total assets.B. net income times market price per share of stock.C. net income divided by market price per share of stock.D. market price per share of stock divided by earnings per share.E. market value of equity per share divided by book value of equity per share.Difficulty level: MediumTopic: MARKET-TO-BOOK RATIOType: DEFINITIONS 28. The _____ breaks down return on equity into three component parts. A. Du Pont identityB. return on assetsC. statement of cash flowsD. asset turnover ratioE. equity multiplierDifficulty level: MediumTopic: DU PONT IDENTITYType: DEFINITIONS 29. The External Funds Needed (EFN) equation does not measure the: A. additional asset requirements given a change in sales.B. additional total liabilities raised given the change in sales.C. rate of return to shareholders given the change in sales.D. net income expected to be earned given the change in sales.E. None of the above.Difficulty level: MediumTopic: EXTERNAL FUNDS NEEDEDType: DEFINITIONS30. To calculate sustainable growth rate without using return on equity, the analyst needs the: A. profit margin.B. payout ratio.C. debt-to-equity ratio.D. total asset turnover.E. All of the above.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS 31. Growth can be reconciled with the goal of maximizing firm value: A. because greater growth always adds to value.B. because growth must be an outcome of decisions that maximize NPV.C. because growth and wealth maximization are the same.D. because growth of any type cannot decrease value.E. None of the above.Difficulty level: MediumTopic: GROWTHType: DEFINITIONS 32. Sustainable growth can be determined by the: A. profit margin, total asset turnover and the price to earnings ratio.B. profit margin, the payout ratio, the debt-to-equity ratio, and the asset requirement or asset turnover ratio.C. Total growth less capital gains growth.D. Either A or B.E. None of the above. Difficulty level: MediumTopic: SUSTAINABLE GROWTHType: DEFINITIONS33. Which of the following will increase sustainable growth? A. Buy back existing stockB. Decrease debtC. Increase profit marginD. Increase asset requirement or asset turnover ratioE. Increase dividend payout ratioDifficulty level: MediumTopic: SUSTAINABLE GROWTHType: DEFINITIONS 34. The main objective of long-term financial planning models is to: A. determine the asset requirements given the investment activities of the firm.B. plan for contingencies or uncertain events.C. determine the external financing needs.D. All of the above.E. None of the above.Difficulty level: MediumTopic: LONG-TERM PLANNINGType: DEFINITIONS 35. On a common-size balance sheet, all _____ accounts are shown as a percentage of _____. A. income; total assetsB. liability; net incomeC. asset; salesD. liability; total assetsE. equity; salesDifficulty level: MediumTopic: COMMON-SIZE BALANCE SHEETType: DEFINITIONS36. Which one of the following statements is correct concerning ratio analysis? A. A single ratio is often computed differently by different individuals.B. Ratios do not address the problem of size differences among firms.C. Only a very limited number of ratios can be used for analytical purposes.D. Each ratio has a specific formula that is used consistently by all analysts.E. Ratios can not be used for comparison purposes over periods of time.Difficulty level: MediumTopic: RATIO ANALYSISType: DEFINITIONS 37. Which of the following are liquidity ratios?I. cash coverage ratioII. current ratioIII. quick ratioIV. inventory turnover A. II and III onlyB. I and II onlyC. II, III, and IV onlyD. I, III, and IV onlyE. I, II, III, and IVDifficulty level: MediumTopic: LIQUIDITY RATIOSType: DEFINITIONS 38. An increase in which one of the following accounts increases a firm's current ratio without affecting its quick ratio? A. accounts payableB. cashC. inventoryD. accounts receivableE. fixed assetsDifficulty level: MediumTopic: LIQUIDITY RATIOSType: DEFINITIONS39. A supplier, who requires payment within ten days, is most concerned with which one of the following ratios when granting credit? A. currentB. cashC. debt-equityD. quickE. total debtDifficulty level: MediumTopic: LIQUIDITY RATIOSType: DEFINITIONS 40. A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every: A. $1 in equity.B. $1 in total sales.C. $1 in current assets.D. $.53 in equity.E. $.53 in total assets.Difficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS 41. The long-term debt ratio is probably of most interest to a firm's: A. credit customers.B. employees.C. suppliers.D. mortgageholder.E. shareholders.Difficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS42. A banker considering loaning a firm money for ten years would most likely prefer the firm have a debt ratio of _____ and a times interest earned ratio of _____. A. .75; .75B. .50; 1.00C. .45;1.75D. .40;2.50E. .35;3.00Difficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS 43. From a cash flow position, which one of the following ratios best measures a firm's ability to pay the interest on its debts? A. times interest earned ratioB. cash coverage ratioC. cash ratioD. quick ratioE. Interval measureDifficulty level: MediumTopic: LONG-TERM SOLVENCY RATIOSType: DEFINITIONS 44. The higher the inventory turnover measure, the: A. faster a firm sells its inventory.B. faster a firm collects payment on its sales.C. longer it takes a firm to sell its inventory.D. greater the amount of inventory held by a firm.E. lesser the amount of inventory held by a firm.Difficulty level: MediumTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS45. Which one of the following statements is correct if a firm has a receivables turnover measure of 10? A. It takes a firm 10 days to collect payment from its customers.B. It takes a firm 36.5 days to sell its inventory and collect the payment from the sale.C. It takes a firm 36.5 days to pay its creditors.D. The firm has an average collection period of 36.5 days.E. The firm has ten times more in accounts receivable than it does in cash.Difficulty level: MediumTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS 46. A total asset turnover measure of 1.03 means that a firm has $1.03 in: A. total assets for every $1 in cash.B. total assets for every $1 in total debt.C. total assets for every $1 in equity.D. sales for every $1 in total assets.E. long-term assets for every $1 in short-term assets.Difficulty level: MediumTopic: ASSET MANAGEMENT RATIOSType: DEFINITIONS 47. Puffy's Pastries generates five cents of net income for every $1 in sales. Thus, Puffy's has a _____ of 5%. A. return on assetsB. return on equityC. profit marginD. Du Pont measureE. total asset turnoverDifficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS48. If a firm produces a 10% return on assets and also a 10% return on equity, then the firm: A. has no debt of any kind.B. is using its assets as efficiently as possible.C. has no net working capital.D. also has a current ratio of 10.E. has an equity multiplier of 2.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS 49. If shareholders want to know how much profit a firm is making on their entire investment in the firm, the shareholders should look at the: A. profit margin.B. return on assets.C. return on equity.D. equity multiplier.E. earnings per share. Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS 50. BGL Enterprises increases its operating efficiency such that costs decrease while sales remain constant. As a result, given all else constant, the: A. return on equity will increase.B. return on assets will decrease.C. profit margin will decline.D. equity multiplier will decrease.E. price-earnings ratio will increase.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS51. The only difference between Joe's and Moe's is that Joe's has old, fully depreciated equipment. Moe's just purchased all new equipment which will be depreciated over eight years. Assuming all else equal: A. Joe's will have a lower profit margin.B. Joe's will have a lower return on equity.C. Moe's will have a higher net income.D. Moe's will have a lower profit margin.E. Moe's will have a higher return on assets.Difficulty level: MediumTopic: PROFITABILITY RATIOSType: DEFINITIONS 52. Last year, Alfred's Automotive had a price-earnings ratio of 15. This year, the price earnings ratio is 18. Based on this information, it can be stated with certainty that: A. the price per share increased.B. the earnings per share decreased.C. investors are paying a higher price for each share of stock purchased.D. investors are receiving a higher rate of return this year.E. either the price per share, the earnings per share, or both changed.Difficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS 53. Turner's Inc. has a price-earnings ratio of 16. Alfred's Co. has a price-earnings ratio of 19. Thus, you can state with certainty that one share of stock in Alfred's: A. has a higher market price than one share of stock in Turner's.B. has a higher market price per dollar of earnings than does one share of Turner's.C. sells at a lower price per share than one share of Turner's.D. represents a larger percentage of firm ownership than does one share of Turner's stock.E. earns a greater profit per share than does one share of Turner's stock.Difficulty level: MediumTopic: MARKET VALUE RATIOType: DEFINITIONS54. Which two of the following are most apt to cause a firm to havea higher price-earnings ratio?I. slow industry outlookII. high prospect of firm growthIII. very low current earningsIV. investors with a low opinion of the firm A. I and II onlyB. II and III onlyC. II and IV onlyD. I and III onlyE. III and IV onlyDifficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS 55. Vinnie's Motors has a market-to-book ratio of 3. The book value per share is $4.00. Holding market-to-book constant, a $1 increase in the book value per share will: A. cause the accountants to increase the equity of the firm by an additional $2.B. increase the market price per share by $1.C. increase the market price per share by $12.D. tend to cause the market price per share to rise.E. only affect book values but not market values. Difficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS 56. Which one of the following sets of ratios applies most directly to shareholders? A. return on assets and profit marginB. quick ratio and times interest earnedC. price-earnings ratio and debt-equity ratioD. market-to-book ratio and price-earnings ratioE. cash coverage ratio and times equity multiplierDifficulty level: MediumTopic: MARKET VALUE RATIOSType: DEFINITIONS57. The three parts of the Du Pont identity can be generally described as:I. operating efficiency, asset use efficiency and firm profitability.II. financial leverage, operating efficiency and asset use efficiency.III. the equity multiplier, the profit margin and the total asset turnover.IV. the debt-equity ratio, the capital intensity ratio and the profit margin. A. I and II onlyB. II and III onlyC. I and IV onlyD. I and III onlyE. III and IV onlyDifficulty level: MediumTopic: DU PONT IDENTITYType: DEFINITIONS 58. If a firm decreases its operating costs, all else constant, then: A. the profit margin increases while the equity multiplier decreases.B. the return on assets increases while the return on equity decreases.C. the total asset turnover rate decreases while the profit margin increases.D. both the profit margin and the equity multiplier increase.E. both the return on assets and the return on equity increase.Difficulty level: MediumTopic: DU PONT IDENTITYType: DEFINITIONS 59. Which one of the following statements is correct? A. Book values should always be given precedence over market values.B. Financial statements are frequently the basis used for performance evaluations.C. Historical information has no value when predicting the future.D. Potential lenders place little value on financial statement information.E. Reviewing financial information over time has very limited value.Difficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS60. It is easier to evaluate a firm using its financial statements when the firm: A. is a conglomerate.B. is global in nature.C. uses the same accounting procedures as other firms in its industry.D. has a different fiscal year than other firms in its industry.E. tends to have one-time events such as asset sales and property acquisitions.Difficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS 61. Which two of the following represent the most effective methods of directly evaluating the financial performance of a firm?I. comparing the current financial ratios to those of the same firm from prior time periodsII. comparing a firm's financial ratios to those of other firms in the firm's peer group who have similar operationsIII. comparing the financial statements of the firm to the financial statements of similar firms operating in other countriesIV. comparing the financial ratios of the firm to the average ratios of all firms located in the same geographic area A. I and II onlyB. II and III onlyC. III and IV onlyD. I and IV onlyE. I and III onlyDifficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS 62. In the financial planning model, external funds needed (EFN) is equal to changes in A. assets - (liabilities - equity).B. assets - (liabilities + equity).C. (assets + liabilities - equity).D. (assets + equity - liabilities).E. assets - equity. Difficulty level: MediumTopic: EXTERNAL FUNDS NEEDEDType: DEFINITIONS63. Which of the following represent problems encountered when comparing the financial statements of one firm with those of another firm?I. Either one, or both, of the firms may be conglomerates and thus have unrelated lines of business.II. The operations of the two firms may vary geographically.III. The firms may use differing accounting methods for inventory purposes.IV. The two firms may be seasonal in nature and have different fiscal year ends. A. I and II onlyB. II and III onlyC. I, III, and IV onlyD. I, II, and III onlyE. I, II, III, and IVDifficulty level: MediumTopic: EVALUATING FINANCIAL STATEMENTSType: DEFINITIONS 64. A firm's sustainable growth rate in sales directly depends on its: A. debt to equity ratio.B. profit margin.C. dividend policy.D. asset efficiency.E. All of the above. Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS 65. The sustainable growth rate will be equivalent to the internal growth rate when: A. a firm has no debt.B. the growth rate is positive.C. the plowback ratio is positive but less than 1.D. a firm has a debt-equity ratio exactly equal to 1.E. net income is greater than zero.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS66. The sustainable growth rate: A. assumes there is no external financing of any kind.B. is normally higher than the internal growth rate.C. assumes the debt-equity ratio is variable.D. is based on receiving additional external debt and equity financing.E. assumes that 100% of all income is retained by the firm.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS 67. If a firm bases its growth projection on the rate of sustainable growth, and shows positive net income, then the: A. fixed assets will have to increase at the same rate, regardless of the current capacity level.B. number of common shares outstanding will increase at the same rate of growth.C. debt-equity ratio will have to increase.D. debt-equity ratio will remain constant while retained earnings increase.E. fixed assets, debt-equity ratio, and number of common shares outstanding will all increase.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS 68. Marcie's Mercantile wants to maintain its current dividend policy, which is a payout ratio of 40%. The firm does not want to increase its equity financing but is willing to maintain its current debt-equity ratio. Given these requirements, the maximum rate at which Marcie's can grow is equal to: A. 40% of the internal rate of growth.B. 60% of the internal rate of growth.C. the internal rate of growth.D. the sustainable rate of growth.E. 60% of the sustainable rate of growth.Difficulty level: MediumTopic: SUSTAINABLE GROWTH RATEType: DEFINITIONS69. One of the primary weaknesses of many financial planning models is that they: A. rely too much on financial relationships and too little on accounting relationships.B. are iterative in nature.C. ignore the goals and objectives of senior management.D. are based solely on best case assumptions.E. ignore the size, risk, and timing of cash flows.Difficulty level: MediumTopic: FINANCIAL PLANNING MODELSType: DEFINITIONS 70. Financial planning, when properly executed: A. ignores the normal restraints encountered by a firm.B. ensures that the primary goals of senior management are fully achieved.C. reduces the necessity of daily management oversight of the business operations.D. helps ensure that proper financing is in place to support the desired level of growth.E. eliminates the need to plan more than one year in advance. Difficulty level: MediumTopic: FINANCIAL PLANNINGType: DEFINITIONS 71. When examining the EBITDA ratio, lower numbers are: A. considered good.B. considered mediocre.C. considered poor.D. indifferent to higher numbers.E. it is impossible to garner information from this ratio.Difficulty level: MediumTopic: EBITDA RATIOType: DEFINITIONS72. A firm's market capitalization is equal to: A. total book value of assets less book value of debt.B. par value of common equity.C. firm's stock price multiplied by number of shares outstanding.D. firm's stock price multiplied by the number of shares authorized.E. the maximum value an acquirer would pay for a firm in an acquisition.Difficulty level: MediumTopic: MARKET CAPITALIZATIONType: DEFINITIONS 73. Enterprise value focused on: A. market values of debt and equity.B. book values of debt and assets.C. market value of equity and book value of debt.D. book value if debt and market value of equity.E. book values of debt and equity.Difficulty level: MediumTopic: ENTERPRISE VALUEType: DEFINITIONS 74. A firm has sales of $1,200, net income of $200, net fixed assets of $500, and current assets of $300. The firm has $100 in inventory. What is the common-size statement value of inventory? A. 8.3%B. 12.5%C. 20.0%D. 33.3%E. 50.0%Common-size inventory = $100 ($500 + $300) = .125 = 12.5%Difficulty level: MediumTopic: COMMON-SIZE STATEMENTSType: PROBLEMS75. A firm has sales of $1,500, net income of $100, total assets of $1,000, and total equity of $700. Interest expense is $50. What is the common-size statement value of the interest expense? A. 3.3%B. 5.0%C. 7.1%D. 16.7%E. 50.0%Common-size interest = $50 $1,500 = .033 = 3.3%Difficulty level: MediumTopic: COMMON-SIZE STATEMENTSType: PROBLEMS 76. Jessica's Boutique has cash of $50, accounts receivable of $60, accounts payable of $200, and inventory of $150. What is the value of the quick ratio? A. .30B. .55C. .77D. 1.30E. 1.82Quick ratio = ($50 + $60) $200 = .55Difficulty level: MediumTopic: LIQUIDITY RATIOSType: PROBLEMS77. A firm has a debt-equity ratio of .40. What is the total debt ratio? A. .29B. .33C. .67D. 1.40E. 1.50。

会计英语叶建芳答案会计英语叶建芳答案>一、课程性质与目标（一）课程性质《会计英语》是会计学专业的学科基础课程之一，是为培养既具备国际相关专业知识和业务技能又具备熟练运用专业英语从事专业工作的人才而开设的一门专业限选课。

本课程的先修课程为会计学原理，大学英语等。

（二）课程目标本课程讲授内容基于国际会计准则之下的会计概念、财务报表、流动资产、长期资产、负债与或有事项、所有者权益以及会计的其他领域如成本会计，管理会计和审计的概况等。

通过本课程的学习，要求学生了解中国和XX会计处理的相同和不同，掌握基本的会计处理的英文表达方式，熟练掌握专业的英文术语。

通过考核，检查学生是否具备阅读会计英语文献，基础的专业交流能力，基础的专业做账能力。

为学生今后在外企工作，从事外贸工作打下良好的基础。

二、考试内容与考核目标chapter 1 conceptual framework underlying accounting （一）考试内容1. definition of accounting2. objectives of financial accounting3. the qualitative characteristics of accounting information4. the basic elements of financial statements and equations.5. the basic accounting assumptions（二）考核目标1. to learn objectives of financial accounting2. to learn the basic accounting assumptions3. master the basic elements of financial statements andequations4. proficiency in the qualitative characteristics o faccountinginformation.chapter 2 the accounting information system（一）考试内容1. the basic terminology in collecting accounting data.2. the double-entry system3. the procedures of accounting cycle（二）考核目标1. proficency the basic terminology in collecting accountingdata.2. understand the double-entry system3. understand the procedures of accounting cycle chapter 3 financial reporting（一）考试内容1. the elements of balance sheet and how to prepare thebalance sheet2. the elements of ine statement and how to prepare theine statement3. the elements of the statement of cash flows4. the five sections of full disclosure. （二）考核目标1. proficency the elements of balance sheet and how toprepare the balance sheet.2. prjoficency the elements of ine statement and how toprepare the ine statement.3. master the elements of the statement of cash flows4. to learn the five sections of full disclosure. chapter 4 current assets（一）考试内容1. the definition of cash and cash equivalents2. the definition of receivables and classification ofreceivables.3. the definition of account receivables, two discounts, andtwo methods used to calculate the exchange price under cashdiscount —the gross method and the method4. two methods to deal with un-collectible accountsreceivables —the direct write-off method and the allowancemethod5. two methods to determine the inventory quantity —periodicinventory system and perpetual inventory system6. master four methods available to account for the flow ofgoods from purchase to sale:(1) specific identification, (2) first in, first out, (3) last in, first out,(4) averaging7. three methods to report temporary investment-- historicalcost, market value, and the lower of cost or market （二）考核目标1. understand the definition of cash and cash equivalents2. learn the definition of receivables and classification ofreceivables.3. understand the definition of account receivables, twodiscounts, and two methods used to calculate the exchangeprice under cash discount —the gross method and the method4. figure out two methods to deal with un-collectible accountsreceivables —the direct write-off method and the allowancemethod5. identify two methods to determine the inventory quantity —periodic inventory system and perpetual inventory system6. master four methods available to account for the flow ofgoods from purchase to sale:(1) specific identification, (2) first in, first out, (3) last in, first out,(4) averaging7. understand three methods to report temporary investment--historical cost, market value, and the lower of cost or market chapter 5 long-term assets （一）考试内容1. the characteristics of property, plant, and equipment, andhow to record ppe under different situations.2. the methods of depreciation.3. capitalization expenditure and revenue expenditure of thefixed assets.4. the disposition of fixed assets5. three circumstances of investment of equity securities.6. three different debt securities.7. the characteristics of intangible assets.8. the different kinds of intangible assets （二）考核目标1. to identify the characteristics of property, plant, andequipment, and how to record ppe under different situations.2. to understand the methods of depreciation.3. to figure out capitalization expenditure and revenueexpenditure of the fixed assets.4. to learn how to deal with the disposition of fixed assets5. to understand the three circumstances of investment ofequity securities.6. to learn the three different debt securities.7. to understand the characteristics of intangible assets.8. to learn the different kinds of intangible assets chapter 6 liabilities and contingencies （一）考试内容1. the definition of current liabilities and related elements,especially notes payable2. the classification of bonds payable.3. the definition of par value, premium, discount, statedinterest rate, the effective yield, and the method to deal withamortization of premium and discount.4. the characteristics of contingency（二）考核目标1. understand the definition of currentliabilities relatedelements, especially notes payable2. identify the classification of bonds payable.3. prehend the definition of par value, premium, discount,stated interest rate, the effective yield, and the method to dealwith amortization of premium and discount.4. understand the characteristics of contingencychapter 7 stockholders ’ equity（一）考试内容1. the definition and characteristics of equity2. the sole proprietorships ’ characteristics.3. thepartnerships ’ characteristics. 4. thecorporation ’s characteristics.5. the difference between mon stock and preferred stock.6. two methods to record treasury stock（二）考核目标1. understand the definition and characteristics of equity2. identify the sole proprietorships ’ chearriasctitcs.3. learn the partnerships ’ characteristics.4. understand the corporation ’s characteristics.5. figure out the difference between mon stock andpreferred stock.6. master two methods to record treasury stock chapter8 the other fields of accounting---cost accounting,managerialaccounting, auditing（一）考试内容1. the two principles of cost accounting systems2. the characteristics of managerial accounting3. the characteristics of auditing and sevral audit reports （二）考核目标1. understand the essential of costing accounting and itsscope2. learn the characteristics of managerial accounting3. figure out the difference between auditing and accounting三、教材及参考（一）本课程使用的教材《会计英语简明教程》 [英文版 ] 李越冬编著西南财经大学出版社2022 年 5 月第 1 版（二）参考1．叶建芳，孙红星，何瑞丰 .会计英语 .上海：复旦大学出版社，2022 年2．于久洪 . 会计英语 .北京：中国人民大学出版社，2022 年3. 张国华，王晓巍著 .财会专业英语 .北京：科学出版社， 2022 年四、考试题（样题）本试题包括填空（考查对定义的理解）、调整分录（会计循环）、会计处理、完成资产负债表（考查资产负债表的要素分类）、编制利润表。

PART IIANSWERS TO END-OF-CHAPTER QUESTIONSCHAPTER 3: STRATEGIC AND FINANCIAL LOGISTICS3-1. Discuss the differences between corporate level, business unit level, and functional level strategies.Corporate-level strategy is focused on determining the goals for the company, the typesof businesses in which the company should compete, and the way the company will be managed. Strategy at a business unit level is primarily focused on the products and services provided to customers and on finding ways to develop and maintain a sustainable competitive advantage with these customers. The functional level strategies are related to business activities that support the achievement of the higher-level goals set by the business unit and corporation.3-2. Discuss the cost leadership, differentiation advantage, and focus strategies.A cost leadership strategy requires an organization to pursue activities that will enable it to become a low-cost producer in an industry for a given level of quality. A differentiation strategy entails an organization developing a product or service that offers unique attributes that customers value and perceive to be distinct from competitor offerings. A focus strategy concentrates an organization’s effort on a narrowly defined market to achieve either a cost leadership or differentiation strategy.3-3. What are the two key components of an income statement?Revenues and expenses are the two key components of an income statement. Revenues (sales) provide a dollar value of all the products and services an organization provides to its customers during a given period of time. Expenses (costs) provide a dollar value for the costs incurred in generating services during a given period of time.3-4. What are the three key components of a balance sheet?Assets, liabilities, and owners’ equity are the three key components of the balance sheet. Assets are what a company owns and come in two temporal forms: current assets and long-term assets. Liabilities are the financial obligations a company owes to another party. Liabilities also come in two temporal forms: current liabilities and long-term liabilities. Owners’ equity is the difference between what a company owns and what it owes at any particular time.3-5. What are the three key components of the statement of cash flows?The statement of cash flows contains information from the income statement and balance sheet, but is formatted to highlight the sources and uses of cash in an organization’s operations, and in investing and financing activities. Accounts payable, accounts receivable, revenue growth, gross margin, sales—general and administration, capital expenditures, and inventory are all areas that affect cash flows within an organization.3-6. What are the key components of the Strategic Profit Model? How can it be used to examine the effect of logistics decisions?Briefly, the Strategic Profit Model can be drilled down to Net Profit Margin x Asset Turnover = Return on Assets. Return on assets indicates what percentage of every dollar invested in the business is ultimately returned to the organization as profit. Net profit margin measures the proportion of each sales dollar that is kept as profit, and asset turnover measures the efficiency of the capital employed to generate sales. The Strategic Profit Model has the advantage of assisting logistics managers in the evaluation of cash flows and asset utilization decisions. Suppose, for example, that a logistics manager is able to eliminate some unnecessary inventory. This would reduce the value of current assets as well as total asset value. As a result, sales divided by total assets—asset turnover—would be higher, as would the organization’s return on assets.3-7. Discuss how logistics decisions affect net profit margin in an organization.The most relevant net profit margin considerations for logistics managers are sales, costs of goods sold, and total expenses. A primary influence of logistics activities on sales would be through the improvement of customer service. Logistics can impact costs of goods sold through procurement activities or through any logistics-related efficiency improvement that enables labor to be more productive. Expenses can include logistics-related activities such as transportation, warehousing, and inventory. A logistics decision to reduce the number of less-than-truckload shipments through a consolidation strategy would show up in the transportation costs category that is part of variable expenses.3-8. Discuss how logistics decisions affect asset turnover in an organization.Two examples involve inventory and accounts receivable. With respect to inventory, a retailer’s decision to move to a system of vendor-managed inventory, where a supplier of a product maintains control and ownership of an inventory item, can result in a significant reduction of the amount of inventory on an organization’s balance sheet. As for accounts receivable, a decision to invest in an EDI system that would increase invoice accuracy should enable customer payments to be received in a more timely fashion.3-9. D iscuss some ways that inventory can be reduced on a firm’s balance sheet.A decision by a retailer to move to a system of vendor-managed inventory where a supplier of a product maintains control and ownership over an inventory item can result in a significant reduction of the amount of inventory on an organization’s balance sheet. Similarly, the use of premium transportation may also enable a firm to reduce lead time and ultimately reduce pipeline inventory that would show up on the balance sheet.3-10. How does logistics strategy connect to overall corporate strategy? Is it a one-way or two-way connection?While the corporate level strategy ultimately sets the goals for the logistics strategy, the functional expertise that exists in the organization will necessarily influence the corporate strategy formulation. The strategic issues at this level are related to business activities that support the achievement of the higher-level goals set by the business unit and corporation. This hierarch of strategy entails the functional units of an organization providing input into the other levels of strategy formulation. This input could take the form of information on the resources and capabilities available to the organization. After the corporate level and business unit strategies are developed, the functional units must translate these strategies into discrete action plans they must accomplish for the higher-level strategies to succeed.Logistics strategy decisions involve issues such as the number and location of warehouses, the selection of appropriate transportation modes, the deployment of inventory, and investments in technology that support logistics activities. In addition to being influenced by the goals of the corporate and business unit strategies, logistics strategy is directly influenced by strategic decisions in the functional areas of marketing and manufacturing. The ability of the logistics function to ultimately influence the overall financial success of an organization is based on the ability of logistics managers to develop and implement strategies that are aligned with the overall corporate strategy. An appreciation for this interconnectedness and need for alignment of strategies is important for every logistics manager.3-11 What are the three primary areas where the Sarbanes-Oxley Act (SOX) has implications for logistics managers?Three primary areas where SOX has implications for logistics managers are internal controls, off balance sheet obligations, and timely reporting of material events. In terms of internal control, timely and accurate accounting of inventory is expected. With respect to off balance sheet obligations, compliance with SOX can involve providing transparency to external relationships with suppliers to manage inventory and/or purchasing agreements. Finally, timely reporting of material events involves the need to provide visibility of late supplier deliveries and/or the inability of suppliers to provide the products or services that are expected to drive revenue for the organization.3-12. Most managers believe that although it is possible to connect logistics decisions to costs, the connection to revenue enhancement is difficult to impossible. Provide an example of how logistics could improve sales.A decision to provide overnight delivery of service to e-commerce customers might have a positive influence on customer retention and sales.3-13. What are some common logistics measures in transportation, warehousing, and inventory management?Transportation:The major transportation measures focus on such things as labor, cost, equipment, energy, and transit time. Measurements in this area include items such as return on investment (investments in transportation equipment), outbound freight costs, transportation labor productivity, on-time deliveries, and in-transit damage frequency.Warehousing:The primary warehousing measures include such things as labor, cost, time, utilization, and administration. Some common measurements focused on warehouse activities include return on investment (investments in warehousing facilities or equipment), warehouse order processing costs, and warehouse labor productivity.Inventory Management:Inventory management measures tend to relate to the inventory service levels to customers as well as controlling inventory investment across an organization’s logistics system. Some common performance measures include obsolete inventory, inventory carrying cost, inventory turnover, and information availability.3-14. Do you think corporate cultures are relevant for designing a logistics measurement system? Why or why not?A re curring theme in the logistics research is that an organization’s logistics capabilit ies need to be directly connected to objective firm performance measures. In addition, this research stream asserts that logistics managers must continue to find ways to effectively communicate how these logistics capabilities provide value and ultimately support corporate strategy and success in financial terms. The ability of the logistics function to ultimately influence the overall financial success of an organization is based on the ability of logistics managers to develop and implement strategies that are aligned with the overall corporate strategy. This entails working directly with other functional areas such as marketing and manufacturing. This working relationship is directly influenced by the corporate culture that exists with a firm and thus holds the potential to help or hinder these alignment efforts.3-15. How do you measure gross margin return on inventory (GMROI)?Gross margin return on inventory is a common metric that is used by retailers and distributors to examine inventory performance based on margin and inventory turn. GMROI can be measured as (Gross Profit in Dollars/Sales in Dollars) x (Sales in Dollars/Average Inventory at Cost).3-16. Describe how logistics decisions might affect an organization’s cost of goods sold. Cost of goods sold includes all the costs of materials and labor directly involved in producing a product or delivering a service. A significant part of this expense category is the cost of materials that are used to make a product. As such, logistics can influence these costs through procurement activities (e.g., purchasing at volume discounts, reverse auctions) or through any logistics-related efficiency improvements that enable labor to be more productive (e.g., enhanced materials handling processes on a production line).3-17. Discuss the common types of information included in traditional logistics measurement systems.Logistics measurement systems have been traditionally designed to include information on five types of performance: asset management, cost, customer service, productivity, and logistics quality. Several measures are designed and implemented in each of these categories to manage logistics activities such as transportation, warehousing, and inventory management. Research suggests that leading-edge organizations are highly focused on performance measurement across these five areas and this serves as a platform on which competitive position, value-adding capabilities, and supply chain integration can grow.3-18. What are the major parts of a balanced scorecard? Why are these parts needed?The Balanced Scorecard (BSC) is made up of performance measures that address particular goals or capabilities in the areas of customers, internal business processes, learning and growth, and financial. This holistic approach is needed in order to force management to look beyond the traditional financial measures when conducting a strategic analysis.3-19. What are the steps for developing an effective logistics scorecard?To develop a n effective logistics scorecard, management first defines the organization’s vision and goals. Next, logistics strategies are designed to ensure achievement of this vision and goals. These strategies are then translated into specific tactical performance-enhancing activities, and, finally, appropriate measures are established for each activity.3-20. Identify some of the key considerations for a logistics manager who is designing and implementing a logistics measurement system in his or her organization.Some of the key things to consider when applying performance measures to logistics activities include:1.Determination of the key measures should be tailored to the individualorganization and level of decision making.2.Data collection and analysis are a major part of a performancemeasurement system in logistics. This complexity is increased in globalsettings.3.Behavioral issues should be considered when establishing andimplementing a system of logistics measures. Top management supportcan help tremendously in this area.4.Frequent communication and constant updating of the measures is anecessary condition for ensuring they are supporting the stated goals of theorganization.PART IIICASE SOLUTIONSCASE 3-1 BRANT FREEZER COMPANYQuestion 1: When comparing performance during the first five months of 2017 with performance in 2016, which warehouse shows the most improvement?St. Louis is the only one showing any improvement, using cost per unit shipped as the performance criterion. The cost for the first five months of 2016 was $9.97 and for the first five months of 2017, it fell to $9.07.Question 2: When comparing performance during the first five months of 2017 with performance in 2016, which warehouse shows the poorest change in performance?The worst change is the company’s own warehouse (located in Fargo), where costs per unit shipped increased 31%. Among the public warehouses used, Denver was the worst in terms of cost per unit handled. It is also the most expensive public warehouse that Brant uses.Question 3: When comparisons are made among all eight warehouses, which one do you think does the best job for the Brant Company? What criteria did you use? Why?Using the cost per unit handled criterion, St. Louis does the best job, closely followed by Chicago.Question 4: J. Q. is aggressive and is going to recommend that his father cancel the contract with one of the warehouses and give that business to a competing warehouse in the same city. J. Q. feels that when word of this gets around, the other warehouses they use will “shape up.” Which of the seven should J. Q. recommend be dropped? Why? Denver has the lowest volume and highest unit costs among all the public warehouses used. In addition, it had been closed by a strike which must have inconvenienced the Brant Company. It may be that the warehouse workers’ unions are strong in the Denver area. J. Q. should probably check out rates and productivity measures of other Denver warehouses before deciding to drop its current warehouse there.Question 5: The year 2017 is nearly half over. J. Q. is told to determine how much the firm is likely to spend for warehousing at each of the eight warehouses for the last six months of 2017. Do his work for him.There is not enough information to do a very precise forecast. J. Q. assumes that the proportion of costs occurring during the first five months of 2016 should be the same proportion in 2017.The projected costs in 2017 (column 3) are calculated by dividing the actual costs for the first five months of 2017 (column 2) by the percent of 2016 costs that occurred in the first five months (column 1). Fo r example, Atlanta’s actual 2017 costs of $40,228 divided by 2016’s 22.88% yields projected 2017 costs of approximately $175,822.The projected costs in the last six months of 2017 (column 4) are calculated by subtracting the actual costs for the first five months of 2017 (column 2) from 2017’s projected total costs (column 3). This gives us the projected costs for the last seven months of 2017. However, we are only interested in the last six months of 2017, so this number is multiplied by 6/7, or .857. Continuing with Atlanta, 2017’s projected total costs of $175,822 minus the first five months’ actual costs of $40,228 equals $135,394. Multiplying this by 6/7 yields projected six months’ costs of approximately $116,204. Question 6: When comparing the 2016 figures with the 2017 figures shown in the table, the amount budgeted for each warehouse in 2017 was greater than actual 2016 costs. How much of the increase is caused by increased volume of business (units shipped) and how much by inflation?There are several ways to approach this question. One involves calculating the volume difference and inflation difference for each warehouse, as follows:Volume difference = 2016 unit costs x (2017 units shipped – 2016 units shipped) Inflation difference = 2017 units shipped x (2017 unit costs – 2016 unit costs) For example, A tlanta’s volume and inflation differences are:Volume difference: $8.99 x (18,000 – 17,431) = $8.99 x 569 = $5,115Inflation difference: 18,000 x ($9.97 - $8.99) = 18,000 x $.98 = $17,640Question 7: Use the 2016 Income Statement and Balance Sheet to complete a Strategic Profit Model for J. Q.Sales =$4,003,450COGS = $937,000-Total Expenses = $2,486,167Gross Margin =$3,066,450Other Current Assets = $706,034Accounts Receivable= $355,450Inventory =$1,590,435Current Assets =$2,651,919Fixed Assets =$803,056Sales =$4,003,450Net Profit = $580,283Sales =$4,003,450Total Assets =$3,454,975Net Profit Margin =14.495%Asset Turnover =1.159ROA =16.796%+++-//Question 8: Holding all other information constant, what would be the effect on ROA for 2016 if warehousing costs declined 10% from 2016 levels?Given that warehousing costs were $735,982 for 2016, a 10% reduction would beapproximately $73,598. Thus, total expenses would decrease to $2,412,569 ($2,486,167 – $73,598), with the following SPM:Sales =$4,003,450COGS = $937,000-Total Expenses = $2,412,569Gross Margin =$3,066,450Other Current Assets = $706,034Accounts Receivable= $355,450Inventory =$1,590,435Current Assets =$2,651,919Fixed Assets =$803,056Sales =$4,003,450Net Profit = $580,283Sales =$4,003,450Total Assets =$3,454,975Net Profit Margin =16.333%Asset Turnover =1.159ROA =18.926%+++-//。

reported in the financing activity section of the accounting statement of cash flows. When Tyco received payments from customers, the cash inflows were reported as operating cash flows. Another method used by Tyco was to have acquired companies prepay operating expenses. In other words, the company acquired by Tyco would pay vendors for items not yet received. In one case, the payments totaled more than $50 million. When the acquired company was consolidated with Tyco, the prepayments reduced Tyco’s cash outflows, thus increasing the operating cash flows.Dynegy, the energy giant, was accused of engaging in a number of complex “round-trip trades.” The round-trip trades essentially involved the sale of natural resources to a counterparty, with the repurchase of the resources from the same party at the same price. In essence, Dynegy would sell an asset for $100, and immediately repurchase it from the buyer for $100. The problem arose with the treatment of the cash flows from the sale. Dynegy treated the cash from the sale of the asset as an operating cash flow, but classified the repurchase as an investing cash outflow. The total cash flows of the contracts traded by Dynegy in these round-trip trades totaled $300 million.Adelphia Communications was another company that apparently manipulated cash flows. In Adelphia’s case, the company capitalized the labor required to install cable. In other words, the company classified this labor expense as a fixed asset. While this practice is fairly common in the telecommunications industry, Adelphia capitalized a higher percentage of labor than is common. The effect of this classification was that the labor was treated as an investment cash flow, which increased the operating cash flow.In each of these examples, the companies were trying to boost operating cash flows by shifting cash flows to a different heading. The important thing to notice is that these movements don’t affect the total cash flow of the firm, which is why we recommend focusing on this number, not just operating cash flow.Summary and ConclusionsBesides introducing you to corporate accounting, the purpose of this chapter has been to teach you how to determine cash flow from the accounting statements of a typical company.1. Cash flow is generated by the firm and paid to creditors and shareholders. It can be classifiedas:1. Cash flow from operations.2. Cash flow from changes in fixed assets.3. Cash flow from changes in working capital.2. Calculations of cash flow are not difficult, but they require care and particular attention to detailin properly accounting for noncash expenses such as depreciation and deferred taxes. It is especially important that you do not confuse cash flow with changes in net working capital and net income.Concept Questions1. Liquidity True or false: All assets are liquid at some price. Explain.2. Accounting and Cash Flows Why might the revenue and cost figures shown on a standardincome statement not represent the actual cash inflows and outflows that occurred during a period?3. Accounting Statement of Cash Flows Looking at the accounting statement of cash flows,what does the bottom line number mean? How useful is this number for analyzing a company? 4. Cash Flows How do financial cash flows and the accounting statement of cash flows differ?Which is more useful for analyzing a company?5. Book Values versus Market Values Under standard accounting rules, it is possible for astockholders’ equity of Information Control Corp. one year ago:During the past year, Information Control issued 10 million shares of new stock at a total price of $43 million, and issued $10 million in new long-term debt. The company generated $9 million in net income and paid $2 million in dividends. Construct the current balance sheet reflecting the changes that occurred at Information Control Corp. during the year.8. Cash Flow to Creditors The 2009 balance sheet of Anna’s Tennis Shop, Inc., showed long-term debt of $1.34 million, and the 2010 balance sheet showed long-term debt of $1.39 million.The 2010 income statement showed an interest expense of $118,000. What was the firm’s cash flow to creditors during 2010?9. Cash Flow to Stockholders The 2009 balance sheet of Anna’s Tennis Shop, Inc., showed$430,000 in the common stock account and $2.6 million in the additional paid-in surplus account.The 2010 balance sheet showed $450,000 and $3.05 million in the same two accounts, respectively. If the company paid out $385,000 in cash dividends during 2010, what was the cash flow to stockholders for the year?10. Calculating Cash Flows Given the information for Anna’s Tennis Shop, Inc., in the previoustwo problems, suppose you also know that the firm’s net capital spending for 2010 was $875,000 and that the firm reduced its net working capital investment by $69,000. What was the firm’s 2010 operating cash flow, or OCF?INTERMEDIATE (Questions 11–24)11. Cash Flows Ritter Corporation’s accountants prepared the following financial statements foryear-end 2010:1. Explain the change in cash during 2010.2. Determine the change in net working capital in 2010.3. Determine the cash flow generated by the firm’s assets during 2010.12. Financial Cash Flows The Stancil Corporation provided the following current information:Determine the cash flows from the firm and the cash flows to investors of the firm.13. Building an Income Statement During the year, the Senbet Discount Tire Company hadgross sales of $1.2 million. The firm’s cost of goods sold and selling expenses were $450,000 and $225,000, respectively. Senbet also had notes payable of $900,000. These notes carried an interest rate of 9 percent. Depreciation was $110,000. Senbet’s tax rate was 35 percent.1. What was Senbet’s net income?2. What was Senbet’s operating cash flow?14. Calculating Total Cash Flows Schwert Corp. shows the following information on its 2010income statement: sales = $167,000; costs = $91,000; other expenses = $5,400; depreciation expense = $8,000; interest expense = $11,000; taxes = $18,060; dividends = $9,500. In addition, you’re told that the firm issued $7,250 in new equity during 2010 and redeemed $7,100 in outstanding long-term debt.1. What is the 2010 operating cash flow?2. What is the 2010 cash flow to creditors?3. What is the 2010 cash flow to stockholders?4. If net fixed assets increased by $22,400 during the year, what was the addition to networking capital (NWC)?15. Using Income Statements Given the following information for O’Hara Marine Co., calculatethe depreciation expense: sales = $43,000; costs = $27,500; addition to retained earnings = $5,300; dividends paid = $1,530; interest expense = $1,900; tax rate = 35 percent.1. What is owners’ equity for 2009 and 2010?2. What is the change in net working capital for 2010?3. In 2010, Weston Enterprises purchased $1,800 in new fixed assets. How much in fixedassets did Weston Enterprises sell? What is the cash flow from assets for the year? (The tax rate is 35 percent.)4. During 2010, Weston Enterprises raised $360 in new long-term debt. How much long-termdebt must Weston Enterprises have paid off during the year? What is the cash flow to creditors?Use the following information for Ingersoll, Inc., for Problems 23 and 24 (assume the tax rate is34 percent):23. Financial Statements Draw up an income statement and balance sheet for this company for2009 and 2010.24. Calculating Cash Flow For 2010, calculate the cash flow from assets, cash flow to creditors,and cash flow to stockholders.CHALLENGE (Questions 25–27)25. Cash Flows You are researching Time Manufacturing and have found the following accountingstatement of cash flows for the most recent year. You also know that the company paid $82 million in current taxes and had an interest expense of $43 million. Use the accounting statement of cash flows to construct the financial statement of cash flows.Nick has also provided the following information: During the year the company raised $118,000 in new long-term debt and retired $98,000 in long-term debt. The company also sold $11,000 in new stock and repurchased $40,000 in stock. The company purchased $786,000 in fixed assets and sold $139,000 in fixed assets.Angus has asked you to prepare the financial statement of cash flows and the accounting statement of cash flows. He has also asked you to answer the following questions:1. How would you describe Warf Computers’ cash flows?2. Which cash flow statement more accurately describes the cash flows at the company?3. In light of your previous answers, comment on Nick’s expansion plans.。

II. CONCEPTSCHAPTER 3 Working with Financial StatementsSOURCES OF CASHa36. An increase in which one of the following is a source of cash?a.accounts payableb.cashc.inventoryd.fixed assetse.accounts receivableSOURCES OF CASHb37. Which of the following is (are) sources of cash?I.an increase in accounts receivableII. a decrease in common stockIII.an increase in long-term debtIV. a decrease in accounts payablea.I onlyb.III onlyc.II and IV onlyd.I and III onlye.I, II, and IV onlyUSES OF CASHe 38. Which one of the following is a use of cash?a.payment received from a customer on their accountb.sale of inventoryc.decrease in the cash balanced.sale of common stocke.payment to a supplierUSES OF CASHe 39. Which of the following is (are) uses of cash?I.payment of a note payableII.repurchase of common stockIII.granting of credit to a customerIV.sale of a fixed asseta.I onlyb.IV onlyc.II and III onlyd.I and III onlye.I, II, and IIIonlyd 40. Which one of the following is found in the financing activity section of a statementof cash flows?a.fixed asset acquisitionb.depreciationc.increase in accounts receivabled.dividends paid incomea 41. According to the statement of cash flows, an increase in accounts receivable willthe cash flow from activities.a.decrease; operatingb.decrease; financingc.increase; operatingd.decrease; financinge.decrease; investmentSTATEMENT OF CASH FLOWSd 42. Which of the following are types of activities shown on a statement of cash flows?I.investmentII.liquidatingIII.operatingIV.financinga.I and III onlyb.II and IV onlyc.II, III, and IV onlyd.I, III, and IV onlye.I, II, and III onlyCOMMON-SIZE BALANCE SHEETd 43. On a common-size balance sheet, all accounts are shown as a percentage of:a.income; total assets.b.liability; net income.c.asset; sales.d.liability; total assets.e.equity; sales.COMMON-BASE YEAR FINANCIAL STATEMENTa 44. On a common-base year financial statement, all accounts are expressed relative tothe base:a.year amount.b.amount of sales.c.amount of total assets. income. cash flow.RATIO ANALYSISa 45. Which one of the following statements is correct concerning ratio analysis?a. A single ratio is often computed differently by different individuals.b.Ratios do NOT address the problem of size differences among firms.c.There is only a very limited number of ratios which can be used for analyticalpurposes.d.Each ratio has a specific formula that is used consistently by all analysts.e.Ratios can NOT be used for comparison purposes over periods of time.LIQUIDITY RATIOSe 46. Which of the following are liquidity ratios?I.interval measureII.current ratioIII.quick ratio working capital to total assetsa.II and III onlyb.I and II onlyc.II, III, and IV onlyd.I, III, and IV onlye.I, II, III, and IVLIQUIDITY RATIOSc 47. An increase in which one of the following accounts increases a firm’s current ratiowithout affecting its quick ratio?a.accounts payableb.cashc.inventoryd.accounts receivablee.fixed assetsLIQUIDITY RATIOSb 48. A supplier, who requires payment within ten days, is most concerned with whichone of the following ratios when granting credit?a.currentb.cashc.debt-equityd.quicke.total debtLIQUIDITY RATIOSb 49. A firm has an interval measure of 83. This means that the firm must:a.pay its creditors within the next 83 days or go bankrupt.b.get additional financing within the next 83 days or possibly face closing the firm.c.sell all of its common stock in the next 83 days or become privately owned.d.pay a dividend to its shareholders every 83 days.e.pay interest on its debt every 83 days.LONG-TERM SOLVENCY RATIOSd 50. A firm has a total debt ratio of .47. This means that that firm has 47 cents in debtfor every:a.$1 in equity.b.$1 in total sales.c.$1 in current assets.d.$.53 in equity.e.$.53 in total assets.LONG-TERM SOLVENCY RATIOSd51. The long-term debt ratio is probably of most interest to a f irm’s:a.credit customers.b.employees.c.suppliers.d.mortgage holder.e.shareholders.LONG-TERM SOLVENCY RATIOSe52. A banker considering loaning a firm money for ten years would most likely prefer the firm have a debt ratio of and a times interest earned ratio of :a. .75; .75.b. .50; 1.00.c. .45; 1.75.d. .40; 2.50.e. .35; 3.00.LONG-TERM SOLVENCY RATIOSb 53. From a cash flow position, which one of the following ratios best measures a firm’sability to pay the interest on its debts?a.times interest earned ratiob.cash coverage ratioc.cash ratiod.quick ratioe.interval measureASSET MANAGEMENT RATIOSa 54. The higher the inventory turnover measure, t he:a.faster a firm sells its inventory.b.faster a firm collects payment on its sales.c.longer it takes a firm to sell its inventory.d.greater the amount of inventory held by a firm.e.lesser the amount of inventory held by a firm.ASSET MANAGEMENT RATIOSd 55. Which one of the following statements is correct if a firm has a receivables turnovermeasure of 10?a.It takes a firm 10 days to collect payment from its customers.b.It takes a firm 36.5 days to sell its inventory and collect the payment from the sale.c.It takes a firm 36.5 days to pay its creditors.d.The firm has an average collection period of 36.5 days.e.The firm has ten times more in accounts receivable than it does in cash.ASSET MANAGEMENT RATIOSd56. A total asset turnover measure of 1.03 means that a firm has $1.03 i n:a.total assets for every $1 in cash.b.total assets for every $1 in total debt.c.total assets for every $1 in equity.d.sales for every $1 in total assets.e.long-term assets for every $1 in short-term assets.ASSET MANAGEMENT RATIOSe57. If a firm wishes to increase its net working capital turnover rate, it should , all else constant.a.increase its current assetsb.increase its total assetsc.decrease its current liabilitiesd.decrease its total liabilitiese.increase its salesASSET MANAGEMENT RATIOSa 58. Bob’s Toys has a fixed asset turnover rate of 1.2 and a total asset turnover rateof .84. Gerold’s Toys has a fixed asset turnover rate of 1.1 and a total assetturnover rate of .96. Both companies have similar operations. Bob’s Toys:a.is using its fixe d assets more efficiently than Gerold’s Toys.b.is using its total assets more efficiently than Gerold’s Toys.c.is generating $1 in sales for every $1.20 in net fixed assets.d.is generating $1.20 in net income for every $1 in net fixed assets.e.has $.84 in total assets for every $.96 Gerold’s has in total assets.PROFITABILITY RATIOSc 59. Puffy’s Pastries generates five cents of net income for every $1 in sales. Thus,Puffy’s has a of 5 percent.a.return on assetsb.return on equityc.profit margind.Du Pont measuree.total asset turnoverPROFITABILITY RATIOSa 60. If a firm produces a 10 percent return on assets and also a 10 percent return onequity, then the firm:a.has no debt of any kind.b.is using its assets as efficiently as possible.c.has no net working capital.d.also has a current ratio of 10.e.has an equity multiplier of 2.PROFITABILITY RATIOSc 61. If shareholders want to know how much profit a firm is making on their entireinvestment in the firm, the shareholders should look at the:a.profit margin.b.return on assets.c.return on equity.d.equity multiplier.e.earnings per share.PROFITABILITY RATIOSa 62. BGL Enterprises increases its operating efficiency such that costs decrease whilesales remain constant. As a result, given all else constant, the:a.return on equity will increase.b.return on assets will decrease.c.profit margin will decline.d.equity multiplier will decrease.e.price-earnings ratio will increase.PROFITABILITY RATIOSd63. The only difference between Joe’s and Moe’s is that Joe’s has old, fully depreciated equipment. Moe’s just purchased all new equipment which will be depreciated overeight years. Assuming all else equal:a.Joe’s will have a lower profit margin.b.Joe’s will have a lower return on equity.c.Moe’s will have a higher net income.d.Moe’s will have a lower profit margin.e.Moe’s will have a higher return on assets.MARKET VALUE RATIOSe64. Last year, Alfred’s Automotive had a price-earnings ratio of 15. This year, the price earnings ratio is 18. Based on this information, it can be stated with certainty that:a.the price per share increased.b.the earnings per share decreased.c.investors are paying a higher price for each share of stock purchased.d.investors are receiving a higher rate of return this year.e.either the price per share, the earnings per share, or both changed.MARKET VALUE RATIOb 65. Turner’s Inc. has a price-earnings ratio of 16. Alfred’s Co. has a price-earningsratio of 19. Thus, you can state with certainty that one share of stock in Alfred’s:a.has a higher market price than one share of stock in Turner’s.b.has a higher market price per dollar of earnings than does one share of Turner’s.c.sells at a lower price per share than one share of Turner’s.d.represents a larger percentage of firm ownership than does one share of Turner’sstock.e.earns a greater profit per share than does one share of Turner’s stock.MARKET VALUE RATIOSb 66. Which two of the following are most apt to cause a firm to have a higher price-earnings ratio?I.slow industry outlookII.high prospect of firm growthIII.very low current earningsIV.investors with a low opinion of the firma.I and II onlyb.II and III onlyc.II and IV onlyd.I and III onlye.III and IV onlyMARKET VALUE RATIOSd 67. Vinnie’s Motors has a market-to-book ratio of 3. The book value per share is $4.00.This means that a $1 increase in the book value per share will:a.cause the accountants to increase the equity of the firm by an additional $2.b.increase the market price per share by $1.c.increase the market price per share by $12.d.tend to cause the market price per share to rise.e.only affect book values but not market values.MARKET VALUE RATIOSd 68. Which one of the following sets of ratios applies most directly to shareholders?a.return on assets and profit marginb.quick ratio and times interest earnedc.price-earnings ratio and debt-equity ratiod.market-to-book ratio and price-earnings ratioe.cash coverage ratio and times equity multiplierDU PONT IDENTITYb 69. The three parts of the Du Pont identity can be generally described as:I.operating efficiency, asset use efficiency and firm profitability.II.financial leverage, operating efficiency and asset use efficiency.III.the equity multiplier, the profit margin and the total asset turnover.IV.the debt-equity ratio, the capital intensity ratio and the profit margin.a.I and II onlyb.II and III onlyc.I and IV onlyd.I and III onlye.III and IV onlyDU PONT IDENTITYe 70. If a firm decreases their operating costs, all else constant, then:a.the profit margin increases while the equity multiplier decreases.b.the return on assets increases while the return on equity decreases.c.the total asset turnover rate decreases while the profit margin increases.d.both the profit margin and the equity multiplier increase.e.both the return on assets and the return on equity increase.b71. Which one of the following statements is correct?a.Book values should always be given precedence over market values.b.Financial statements are frequently the basis used for performance evaluations.c.Historical information has no value when predicting the future.d.Potential lenders place little value on financial statement information.e.Reviewing financial information over time has very limited value.c72. It is easier to evaluate a firm using their financial statements when the firm:a.is a conglomerate.b.is global in nature.es the same accounting procedures as other firms in their industry.d.has a different fiscal year than other firms in their industry.e.tends to have one-time events such as asset sales and property acquisitions.EVALUATING FINANCIAL STATEMENTSa 73. Which two of the following represent the most effective methods ofdirectly evaluating the financial performance of a firm?paring the current financial ratios to those of the same firm from prior timeperiodsparing a firm’s financial ratios to those of other firms in the firm’s peer group who have similar operationsparing the financial statements of the firm to the financial statements of similar firms operating in other countriesparing the financial ratios of the firm to the average ratios of all firms located in the same geographic areaa.I and II onlyb.II and III onlyc.III and IV onlyd.I and IV onlye.I and III onlyEVALUATING FINANCIAL STATEMENTSe 74. Which of the following represent problems encountered when comparing the financialstatements of one firm with those of another firm?I.Either one, or both, of the firms may be conglomerates and thus have unrelatedlines of business.II.The operations of the two firms may vary geographically.III.The firms may use differing accounting methods for inventory purposes.IV.The two firms may be seasonal in nature and have different fiscal year ends.a.I and II onlyb.II and III onlyc.I, III, and IV onlyd.I, II, and III onlye.I, II, III, and IVIII.PROBLEMSSOURCES AND USES OF CASHd 75. Last year Ty’s Grocery had inventory of $237,500 and fixed assets of $51,400. Thisyear, Ty’s has inventory of $231,900 and fixed assets of $48,700. Depreciation for thisyear is $6,300. Which one of the following statements is true given this information?a.Both inventory and fixed assets are uses of cash in the amounts of $5,600 and $3,600,cash respectively.b.Both inventory and fixed assets are uses of cash in the amounts of $5,600 and$2,700, respectively.c.Inventory is a source of cash in the amount of $5,600 and fixed assets is a use ofin the amount of $2,700.d.Inventory is a source of cash in the amount of $5,600 and fixed assets is a use of cash in the amount of $3,600.e.Both inventory and fixed assets are sources of cash in the amounts of $5,600 and$3,600 respectively.SOURCES AND USES OF CASHb76. During the year, Doug’s Bakery decreased their accounts receivable by $50, increasedtheir inventory by $100, and decreased their accounts payable by $50. For these three accounts, the firm has a net:a.$200 use of cash.b.$100 use of cash.c.$0 use of cash.d.$100 source of cash.e.$200 source of cash.SOURCES AND USES OF CASHc77. A firm generates net income of $530. The depreciation expense is $60 and dividends$30, cashpaid are $80. Accounts payable decrease by $40, accounts receivable decrease byinventory increases by $20, and net fixed assets decrease by $40. What is the netfrom operating activity?a. $480b. $530c. $560d. $580e. $600COMMON-SIZE STATEMENTSb 78. A firm has sales of $1,200, net income of $200, net fixed assets of $500, and currentassets of $300. The firm has $100 in inventory. What is the common-size statementvalue of inventory?a.8.3 percentb.12.5 percentc.20.0 percentd.33.3 percente.50.0 percentCOMMON-SIZE STATEMENTSa 79. A firm has sales of $1,500, net income of $100, total assets of $1,000, and total equityof $700. Interest expense is $50. What is the common-size statement value of theinterest expense?a. 3.3 percentb. 5.0 percentc.7.1 percentd.16.7 percente.50.0 percentCOMMON-BASE YEAR STATEMENTSe 80. Last year, which is used as the base year, a firm had cash of $60, accounts receivableWhat is of $100, inventory of $200, and fixed assets of $500. This year the firm has cash of $50, accounts receivable of $150, inventory of $250, and fixed assets of $550.the common-base year value of accounts receivable?a. .12b. .15c. .67d. 1.16e. 1.50LIQUIDITY RATIOSb 81. Jessica’s Boutique has cash of $50, accounts receivable of $60, accounts payable of$200, and inventory of $150. What is the value of the quick ratio?a. .30b. .55c. .77d. 1.30e. 1.82LIQUIDITY RATIOSa 82. Sing Lee’s has accounts payable of $300, inventory of $250, cash of $50, fixed assetsvalue ofof $500, accounts receivable of $200, and long-term debt of $400. What is thethe net working capital to total assets ratio?a. .20b. .33c. .40d. .50e. .67LIQUIDITY RATIOSa 83. A firm has total assets of $2,640 and net fixed assets of $1,500. The average dailyoperating costs are $170. What is the value of the interval measure?a. 6.71b. 8.82c. 11.03d. 13.33e. 15.53LONG-TERM SOLVENCY RATIOSa 84. A firm has a debt-equity ratio of .40. What is the total debt ratio?a. .29b. .33c. .67d. 1.40e. 1.50LONG-TERM SOLVENCY RATIOSA firm has total debt of $1,200 and a debt-equity ratio of .30. What is the value of e 85.thetotal assets?a. $1,560b. $3,000c. $3,600d. $4,000e. $5,200LONG-TERM SOLVENCY RATIOS86. A firm has sales of $3,600, costs of $2,800, interest paid of $100, and depreciation dof$400. The tax rate is 34 percent. What is the value of the cash coverage ratio?a. 2b. 4c. 6d. 8e. 10LONG-TERM SOLVENCY RATIOSd 87. Rosita’s Resources paid $250 in interest and $130 in dividends last year. The timesinterest earned ratio is 3.8 and the depreciation expense is $60. What is the value of thecash coverage ratio?a. 2.40b. 3.52c. 3.80d. 4.04e. 4.28ASSET MANAGEMENT RATIOSc88. Mario’s Home Systems has sales of $2,800, costs of goods sold of $2,100, inventory of$500, and accounts receivable of $400. How many days, on average, does it takeMario’s to sell their inventory?a.65.2 daysb.85.2 daysc.86.9 daysd.96.9 dayse.117.3 daysASSET MANAGEMENT RATIOSd89. Syed’s Industries has accounts receivable of $700, inventory of $1,200, sales of $4,200, and cost of goods sold of $3,400. How long does it take Syed’s to both selltheir inventory and then collect the payment on the sale?a.128 daysb.146 daysc.163 daysd.190 dayse.211 daysASSET MANAGEMENT RATIOSb 90. A firm has net working capital of $400, net fixed assets of $2,400, sales of $6,000, andcurrent liabilities of $800. How many dollars worth of sales are generated from every$1 in total assets?a. $1.33b. $1.67c. $1.88d. $2.33e. $2.50ASSET MANAGEMENT RATIOSd 91. Freda’s, Inc. has sales of $3,200, current liabilities of $900, total assets of $3,000, andnet working capital of $500. How many dollars worth of sales are generated fromevery $1 in net fixed assets?a. $.91b. $1.07c. $1.67d. $2.00e. $2.29PROFITABILITY RATIOSb92. Rosita’s Restaurante has sales of $4,500, total debt of $1,300, total equity of$2,400,and a profit margin of 5 percent. What is the return on assets?a. 5.00 percentb. 6.08 percentc.7.39 percentd.9.38 percente.17.31 percentPROFITABILITY RATIOSc93. Lee Sun’s has sales of $3,000, total assets of $2,500, and a profit margin of 5 percent.The firm has a total debt ratio of 40 percent. What is the return on equity?a. 6 percentb.8 percentc.10 percentd.12 percente.15 percentMARKET VALUE RATIOSd94. Jupiter Explorers has $6,400 in sales. The profit margin is 4 percent. There are6,400shares of stock outstanding. The market price per share is $1.20. What is the price- earnings ratio?a.13b.14c.21d.30e.48MARKET VALUE RATIOSc95. Patti’s has net income of $1,800, a price-earnings ratio of 12, and earnings per share of$1.20. How many shares of stock are outstanding?a. 1,200b. 1,400c. 1,500d. 1,600e. 1,800MARKET VALUE RATIOSd96. A firm has 5,000 shares of stock outstanding, sales of $6,000, net income of $800, a price-earnings ratio of 10, and a book value per share of $.50. What is the market- to-book ratio?a. 1.6b. 2.4c. 3.0d. 3.2e. 3.6DU PONT IDENTITYc97. Frederico’s has a profit margin of 6 percent, a return on assets of 8 percent, and an equity multiplier of 1.4. What is the return on equity?a. 6.7 percentb.8.4 percentc.11.2 percentd.14.6 percente.19.6 percentDU PONT IDENTITYd98. Samuelson’s has a debt-equity ratio of 40 percent, sales of $8,000, net income of $600,and total debt of $2,400. What is the return on equity?a. 6.25 percentb.7.50 percentc.9.75 percentd.10.00 percente.11.25 percentDU PONT IDENTITYa 99. A firm has a return on equity of 15 percent. The debt-equity ratio is 50 percent. Thetotal asset turnover is 1.25 and the profit margin is 8 percent. The total equity is $3,200. What is the amount of the net income?a. $480b. $500c. $540d. $600e. $620The following balance sheet and income statement should be used for questions #100 through #110:Windswept, Inc.2005 Income Statement($ in millions)Net sales $8,450Less: Cost of goods sold 7,240Less: Depreciation 400Earnings before interest and taxes 810Less: Interest paid 70Taxable Income $ 740Less: Taxes 259Net income $ 481Windswept, Inc.2004 and 2005 Balance Sheets($ in millions)2004 2005 2004 2005Cash $ 120 $ 140 Accounts payable $1,110 $1,120Accounts rec. 930 780 Long-term debt 840 1,210Inventory 1,480 1,520 Common stock 3,200 3,000Total $2,530 $2,440 Retained earnings 530 710Net fixed assets 3,150 3,600Total assets $5,680 $6,040 Total liabilities& equity $5,680 $6,040LIQUIDITY RATIOSa100. What is the quick ratio for 2005?a. .82b. .95c. 1.36d. 2.18e. 2.28ASSET MANAGEMENT RATIOSb101. What is the days’ sales in receivables? (use 2005 values)a.31.8 daysb.33.7 daysc.38.4 daysd.41.9 dayse.47.4 daysASSET MANAGEMENT RATIOSd 102. What is the fixed asset turnover? (use 2005 values)a. 1.4b. 1.7c. 2.1d. 2.3e. 2.6FINANCIAL LEVERAGE RATIOSa 103. What is the equity multiplier for 2005?a. 1.6b. 1.8c. 2.0d. 2.3e. 2.5FINANCIAL LEVERAGE RATIOSd 104. What is the cash coverage ratio for 2005?a. 11.6b. 12.8c. 13.7d. 17.3e. 18.8PROFITABILITY RATIOSc105. What is the return on equity for 2005?a. 5.7 percentb. 6.8 percentc.13.0 percentd.15.3 percente.16.0 percentPROFITABILITY RATIOSd106. Windswept, Inc. has 90 million shares of stock outstanding. Their price-earnings ratio for 2005 is 12. What is the market price per share of stock?a. $57.12b. $59.94c. $62.82d. $64.13e. $65.03STATEMENT OF CASH FLOWSb 107. What amount should be included in the financing section of the 2005 statement ofcash flows for dividends paid?a.$180 millionb.$301 millionc.$481 milliond.$530 millione.$710 millionSTATEMENT OF CASH FLOWSe108. What is the amount of the net cash from investment activity for 2005?a.-$50 millionb.$250 millionc.$450 milliond.$700 millione.$850 millionSTATEMENT OF CASH FLOWSd 109. What is the net change in cash during 2005?a.-$40 millionb.-$20 millionc.$0d.$20 millione.$40 millionSTATEMENT OF CASH FLOWSa 110. How will accounts payable appear on the 2005 statement of cash flows?a.increase of $10 million in cash from an operating activityb.decrease of $10 million in cash from an operating activityc.increase of $10 million in cash from an investment activityd.decrease of $10 million in cash from a financing activitye.increase of $10 million in cash from a financing activityThe following balance sheet and income statement should be used for questions #111 through #121:Bayside Inc.2005 Income Statement($ in thousands)Net sales $5,680Less: Cost of goods sold 4,060Less: Depreciation 420Earnings before interest and taxes 1,200Less: Interest paid 30 TaxableIncome $1,170Less: Taxes 410Net income $ 760Bayside, Inc.2004 and 2005 Balance Sheets($ in thousands)2004 2005 2004 2005Cash $ 70 $ 180 Accounts payable $1,350 $1,170Accounts rec. 980 840 Long-term debt 720 500Inventory 1,560 1,990 Common stock 3,200 3,500Total $2,610 $3,010 Retained earnings 940 1,200Net fixed assets 3,600 3,360Total assets $6,210 $6,370 Total liabilities& equity $6,210 $6,370LIQUIDITY RATIOSc 111. What is the net working capital to total assets ratio for 2005?a.18.4 percentb.21.9 percentc.28.9 percentd.31.0 percente.47.3 percentASSET MANAGEMENT RATIOSe 112. How many days on average does it take Bayside to sell their inventory? (Use 2005values)a.126.1 daysb.127.9 daysc.153.8 daysd.176.5 dayse.178.9 daysASSET MANAGEMENT RATIOSd 113. How many dollars of sales are being generated from every dollar of fixed assets?(use 2005 values)a. $.59b. $.89c. $1.02d. $1.69e. $1.76FINANCIAL LEVERAGE RATIOSc 114. What is the debt-equity ratio for 2005?a.22.5 percentb.26.2 percentc.35.5 percentd.45.1 percente.47.7 percentFINANCIAL LEVERAGE RATIOSc 115. What is the times interest earned ratio for 2005?a.30b.36c.40d.50e.54FINANCIAL LEVERAGE RATIOSb 116. What is the equity multiplier for 2005?a. 1.21b. 1.36c. 1.44d. 1.82e. 1.91PROFITABILITY RATIOSa 117. What is the return on equity for 2005?a.16.2 percentb.20.9 percentc.21.7 percentd.22.1 percente.23.3 percentSTATEMENT OF CASH FLOWSc 118. What is the net cash flow from investment activity for 2005?a.-$320 thousandb.-$240 thousandc.$180 thousandd.$240 thousande.$660 thousandSTATEMENT OF CASH FLOWSe 119. How does inventory affect the statement of cash flows for 2005?a. a use of $430 thousand of cash as an investment activityb. a source of $430 thousand of cash as an operating activityc. a use of $400 thousand of cash as a financing activityd. a source of $400 thousand of cash as an investment activitye. a use of $430 thousand of cash as an operating activitySTATEMENT OF CASH FLOWSc120. How does the long-term debt affect the statement of cash flows for 2005?a. a source of $500 thousand of cash as a financing activityb. a use of $500 thousand of cash as an operating activityc. a use of $220 thousand of cash as a financing activityd. a source of $220 thousand of cash as financing activitye. a source of $220 thousand of cash as an operating activity。

TEST BANKCHAPTER 3: STRATEGIC AND FINANCIAL LOGISTICSMultiple Choice Questions (correct answers are bolded)1. Depending on industry and product type, reverse logistics costs as a percent of revenue can range between ___________ and ___________ percent.a. 5; 10b. 4; 8c. 3; 6d. 2; 4[LO: material at beginning of the chapter; Moderate; Application; AACSB Category 3: Analytical thinking]2. Which of the following is not a level at which strategy can be formulated?a. corporateb. business unitc. functionald. individual location[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Synthesis; AACSB Category 3: Analytical thinking]3. ___________ strategy is focused on determining the goals for the company, the types of businesses in which the company should compete, and the way the company will be managed.a. Functional levelb. Business unit levelc. Divisional leveld. Corporate level[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Easy; Concept; AACSB Category 3: Analytical thinking]4. Strategy at a ___________ level is primarily focused on the products and services provided to customers and on finding ways to develop and maintain a sustainable competitive advantage with these customers.a. functionalb. business unitc. divisionald. corporatefinancial outcomes; Easy; Concept; AACSB Category 3: Analytical thinking]5. Which of the following is not one of the generic strategies that can be pursued by an organization, as identified by strategist Michael Porter?a. value enhancementb. differentiationc. cost leadershipd. focus[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Synthesis; AACSB Category 3: Analytical thinking]6. A ___________ strategy entails an organization developing a product and/or service that offers unique attributes that are valued by customers and that the customer perceives to be distinct from competitor offerings.a. focusb. differentiationc. value enhancementd. market orientation[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Easy; Concept; AACSB Category 3: Analytical thinking]7. Which generic strategy concentrates an organization’s effort on a narrowly defined market to achieve either a cost leadership or differentiation strategy?a. hybridb. market orientationc. tailoredd. focus[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Easy; Concept; AACSB Category 3: Analytical thinking]8. A(n) ___________ entails the functional units of an organization providing input into the other levels of strategy formulation.a. supply chainb. differentiation strategyc. hierarchy of strategyd. enterprise resource systemfinancial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]9. Which of the following represents the preferred hierarchy of strategy (i.e., from the first strategy to be developed to the last to be developed)?a. corporate→business unit→functionalb. functional→business unit→corporatec. corporate→business unit→divisionald. business unit→divisional→functional[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Difficult; Synthesis; AACSB Category 3: Analytical thinking]10. ___________ strategy decisions involve issues such as the number and location of warehouses and the selection of appropriate transportation modes.a. Marketingb. Productionc. Financed. Logistics[LO 3.1: To understand how logistics decisions can infl uence an organization’s strategic financial outcomes; Moderate; Application; AACSB Category 3: Analytical thinking]11. Which of the following is not a potential type of logistics strategy decision?a. investments in technology that support logistics activitiesb. selection of appropriate transportation modesc. deployment of inventoryd. product availability[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Synthesis; AACSB Category 3: Analytical thinking]12. When developing logistics strategy, a(n) ___________ strategy refers to the management of logistics activities with a focus on costs.a. marketb. processc. differentiationd. information[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]13. A(n) ___________ strategy refers to management of logistical activities with a goal of achieving coordination and collaboration through the channel.a. marketb. processc. differentiationd. information[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]14. A(n) ___________ strategy allows retail customers to order products anywhere, any time, and on any device, while also allowing them to take delivery when and where they want.a. value co-creationb. omnichannelc. hybrid logisticsd. information-centric[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]15. The ___________ shows revenues, expenses, and profit for a period of time.a. balance sheetb. current ratioc. income statementd. statement of cash flows[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]16. In general, the ___________ measures the profitability of the products and/or services provided by a company.a. balance sheetb. Strategic Profit Model (SPM)c. Balanced Scorecard (BSC)d. income statement[LO 3.2: To review basic financial terminology used by logistics managers; East; Application; AACSB Category 3: Analytical thinking]17. The ___________ reflects the assets, liabilities, and owners’ equity at a given point in time.a. Balanced Scorecard (BSC)b. balance sheetc. income statementd. Strategic Profit Model (SPM)[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]18. The balance sheet reflects the assets, liabilities, and ___________ at a given point in time.a. costs of goods soldb. net incomec. owners’ equityd. asset turnover[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]19. Which of the following does not appear on the balance sheet?a. assetsb. owners’ equityc. liabilitiesd. net income[LO 3.2: To review basic financial terminology used by logistics managers; Moderate; Synthesis; AACSB Category 3: Analytical thinking]20. Which of the following does not affect cash flows within an organization?a. revenue growthb. asset utilizationc. inventoryd. accounts receivable[LO 3.2: To review basic financial terminology used by logistics managers; Moderate; Synthesis; AACSB Category 3: Analytical thinking]21. The ___________ Act has implications for logistics managers in terms of internal controls, off balance sheet obligations, and timely reporting of material events.a. Glass-Steagallb. Financial Managersc. Sarbanes-Oxleyd. Regulatory Accountability[LO 3.3: To explain organizational financial reporting requirements affected by logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]22. The current ratio is calculated by dividing ___________ by ___________.a. total current assets; total current liabilitiesb. total current liabilities; total current assetsc. total assets; total liabilitiesd. total liabilities; total assets[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]23. Which of the following is a common measure of organizational financial success?a. Net profit marginb. Income statementc. Current ratiod. Return on Investment (ROI)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]24. What provides the framework for conducting return on assets (ROA) analysis by incorporating revenues and expenses to generate net profit margin, as well as inclusion of assets to measure asset turnover?a. Balanced Scorecard (BSC)b. Strategic Profit Model (SPM)c. Balance Sheetd. Supply Chain Operations Reference Model[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]25. Return on assets (ROA) equals:a. current assets divided by total assets.b. return on investment divided by return on net worth.c. net profit margin times asset turnover.d. total assets divided by costs of goods sold.[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]26. Suppose that a logistics manager is able to eliminate some unnecessary inventory, which reduces the value of current assets as well as total asset value. What is the corresponding impact on inventory turnover and return on assets (ROA)?a. Both inventory turnover and ROA increase.b. Inventory turnover increases and ROA decreases.c. Inventory turnover decreases and ROA increases.d. Both inventory turnover and ROA decrease.[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Difficult; Synthesis; AACSB Category 3: Analytical thinking]27. What is the formula for net profit margin?a. Gross Profit minus Interest Expensesb. Sales divided by Costs of Goods Soldc. Total Sales divided by Total Assetsd. N et Profit divided by Sales[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]28. With respect to net profit margin, the most relevant categories for logistics managers to consider are:a. sales, costs of goods sold, and asset turnover.b. accounts receivable, costs of goods sold, and total expenses.c. sales, costs of goods sold, and total expenses.d. inventory, accounts receivable, and total expenses.[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]29. What is the formula for asset turnover?a. total sales divided by total assetsb. net profit divided by total assetsc. return on assets divided by total assetsd. return on investment divided by return on net worth[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]30. With respect to asset turnover, ___________ is typically the most relevant logistics asset.a. warehousingb. inventoryc. transportation equipmentd. materials handling equipment[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]31. The Balanced Scorecard (BSC) approach is based on the belief that management should evaluate their business from ___________ distinct perspectives.a. twob. threec. fourd. five[LO 3.5: To consider the value of utilizing the Balanced Scorecard approach for examining the performance of a logistics system; Moderate; Concept; AACSB Category 3: Analytical thinking]32. The ___________ is based on the belief that management should evaluate their business from four different perspectives.a. Balanced Scorecard (BSC)b. Strategic Profit Model (SPM)c. Boston Consulting Group Matrixd. Gross Margin Return on Inventory[LO 3.5: To consider the value of utilizing the Balanced Scorecard approach for examining the performance of a logistics system; Moderate; Concept; AACSB Category 3: Analytical thinking]33. Logistics measurement systems have been traditionally designed to include information on how many types of performance?a. twob. threec. fourd. five[LO 3.6: To compare some of the common performance measures for logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]34. Performance measurement in ___________ is used to identify design and operations options that provide benefits in terms of increased speed or reduced costs.a. materials handlingb. warehousingc. packagingd. order management[LO 3.6: To compare some of the common performance measures for logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]35. ___________ looks at how long an organization’s cash is tied up in receivables, payables, and inventory.a. Cash-to-cash cycleb. Cash flowc. Gross margin return on investment (GMROI)d. Current ratio[LO 3.6: To compare some of the common performance measures for logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]True-False Questions1.Depending on the industry and product type, reverse logistics costs as a percentage of revenues can range between 2 and 4 percent. (False)[LO: material at beginning of the chapter; Moderate; Application; AACSB Category 3: Analytical thinking]2.Developing financial fluency is a critical skill for contemporary logistics managers. (True)[LO: material at beginning of the chapter; Moderate; Application; AACSB Category 3: Analytical thinking]3.Logistics performance is important for achieving competitive advantage for many firms. (True)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Easy; Application; AACSB Category 3: Analytical thinking]4.Strategy can be formulated at a corporate level, a business unit level, and a functional level. (True)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Synthesis; AACSB Category 3: Analytical thinking]5.Strategy at a business unit level is primarily focused on the types of businesses in which the company should compete and the way the company should be managed. (False)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]6.Strategist Michael Porter identified three generic strategies that can be pursued by an organization—namely, cost leadership, differentiation, and value enhancement. (False)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Synthesis; AACSB Category 3: Analytical thinking]7. A differentiation strategy entails an organization developing a product and/or service that offers unique attributes that are valued by customers and that customers perceive to be distinct from competitor offerings. (True)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]8.The hierarchy of strategy entails the functional units of an organization providing input into the other levels of strategy formulation. (True)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Concept; AACSB Category 3: Analytical thinking]9.Functional level strategies exist in marketing and production, but not in logistics. (False) [LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Application; AACSB Category 3: Analytical thinking]10.Marketing goals in areas such as product availability, desired customer service levels, and packaging design have limited influence on logistics decisions. (False)[LO 3.1: To unde rstand how logistics decisions can influence an organization’s strategic financial outcomes; Moderate; Application; AACSB Category 3: Analytical thinking]11. A process strategy refers to management of logistics activities across business units witha focus on reducing complexity for customers. (False)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Easy; Concept; AACSB Category 3: Analytical thinking]12.Research indicates a positive benefit to aligning functional strategies, such as marketing or logistics, with the overall corporate strategy. (True)[LO 3.1: To understand how logistics decisions can influence an org anization’s strategic financial outcomes; Moderate; Application; AACSB Category 3: Analytical thinking]13.An omnichannel strategy allows retail customers to order products anywhere, any time, and on any device, while also allowing them to take delivery when and where they want. (True)[LO 3.1: To understand how logistics decisions can influence an organization’s strategic financial outcomes; Easy; Concept; AACSB Category 3: Analytical thinking]14.An understanding of financial terminology can help logisticians to manage logistical activities to improve their company’s financial performance. (True)[LO 3.2: To review basic financial terminology used by logistics managers; Moderate; Application; AACSB category 3: Analytical thinking]15.The income statement is the same thing as the balance sheet. (False)[LO 3.2: To review basic financial terminology used by logistics managers; Moderate; Application; AACSB category 3: Analytical thinking]16.In general, the income statement measures the profitability of the products and/or service provided by a company. (True)[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]17.Superior logistics service can have a positive influence on an organization’s financial performance. (True)[LO 3.2: To review basic financial terminology used by logistics managers; Moderate; Application; AACSB Category 3: Analytical thinking]18.The balance sheet reflects the assets, liabilities, and costs of goods sold at a given point in time. (False)[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB category 3: Analytical thinking]19.Long-term assets have a useful life of more than two years. (False)[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]20.Owners’ equity is the difference between what a company owns and what it owes at any particular point in time. (True)[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]21.The income statement details how an organization generates cash and where cash is used during a defined period of time. (False)[LO 3.2: To review basic financial terminology used by logistics managers; Easy; Concept; AACSB Category 3: Analytical thinking]22.In terms of the statement of cash flows, the connections between logistics activities and cash flows occur primarily in the operating and financing areas. (True)[LO 3.2: To review basic financial terminology used by logistics managers; Moderate; Application; AACSB Category 3: Analytical thinking]23.Three primary areas where the Sarbanes-Oxley Act (SOX) has implications for logistics managers are internal controls, off balance sheet obligations, and timely reporting of material events. (True)[LO 3.3: To explain organizational financial reporting requirements affected by logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]24.The current ratio is calculated by dividing total current liabilities by total current assets. (False)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Easy; Concept; AACSB Category 3: Analytical thinking]25. A common measure of organizational financial success is return on investment (ROI). (True)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]26.Return on assets (ROA) equals net profit margin times asset turnover. (True)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Easy; Concept; AACSB Category 3: Analytical thinking]27.The Balanced Scorecard (BSC) provides the framework for conducting return on assets (ROA) analysis by incorporating revenues and expenses to generate net profit margin, as well as inclusion of assets to measure asset turnover. (False)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]28. A reduction in inventory would increase inventory turnover, which means an increase in that organization’s return on assets (ROA). (True)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]29.Operationally, net profit margin is net profit divided by cost of goods sold. (False) [LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]30.With respect to net profit margin, the most relevant categories for logistics managers to consider are sales, costs of goods sold, and asset turnover. (False)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]31.The primary influence of logistics activities on sales would be through the improvement of customer service. (True)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]32.Asset turnover is calculated by dividing return on assets by total assets. (False)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Easy; Concept; AACSB Category 3: Analytical thinking]33.With respect to asset turnover, inventory is typically the most relevant logistics asset. (True)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]34. A decision to invest in an electronic data interchange system that would increase invoice accuracy should result in a lower amount of accounts receivable. (True)[LO 3.4: To employ the strategic profit model to highlight the financial impact of logistics activities; Moderate; Application; AACSB Category 3: Analytical thinking]35.The Balanced Scorecard (BSC) is based on the belief that management should evaluate their business from five different perspectives. (False)[LO 3.5: To consider the value of utilizing the Balanced Scorecard approach for examining the performance of a logistics system; Moderate; Application; AACSB Category 3: Analytical thinking]36.According to the Balanced Scorecard (BSC) approach, the financial perspective is considered the best indicator of whether or not logistics strategy is being properly implemented and executed. (False)[LO 3.5: To consider the value of utilizing the Balanced Scorecard approach for examining the performance of a logistics system; Moderate; Application; AACSB Category 3: Analytical thinking]37.The measures associated with the Balanced Scorecard (BSC) can be at a strategic or tactical level. (True)[LO 3.5: To consider the value of utilizing the Balanced Scorecard approach for examining the performance of a logistics system; Moderate; Synthesis; AACSB Category 3: Analytical thinking]38.Best in Class companies tend to use transportation scorecards less frequently than other companies. (False)[LO 3.6: To compare some of the common performance measures for logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]39.The cash-to-cash cycle looks at how long an organization’s cash is tied up in receivables, payables, and inventory. (True)[LO 3.6: To compare some of the common performance measures for logistics activities; Moderate; Concept; AACSB Category 3: Analytical thinking]40.When applying performance measures to logistics activities, determination of the key measures should be tailored to the individual organization and level of decision making. (True) [LO 3.6: To compare some of the common performance measures for logistics activities; Moderate; Synthesis; AACSB Category 3: Analytical thinking]。