Question Details

Which is a common way to compare financial ratios against other companies 



1.	Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN).  Data for use in your forecast are shown below.  Based on the AFN equation, what is the AFN for the coming year?

Last year- sales = S0	$200,000	Last year's accounts payable	$50,000
Sales growth rate = g	40%	Last year's notes payable	$15,000
Last year- total assets = A*0	$135,000	Last year's accruals	$20,000
Last year- profit margin = M	20.0%	Target payout ratio	25.0%

a.	-$14,440
b.	-$15,200
c.	-$16,000
d.	-$16,800
e.	-$17,640
		
2.	Which of the following statements is NOT CORRECT?
a.	When a corporation's shares are owned by a few individuals, we say that the firm is "closely, or privately, held."
b.	"Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares.
c.	The stock of publicly owned companies must generally be registered with and reported to a regulatory agency such as the SEC.
d.	When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public, or an IPO," and the market for such stock is called the new issue or IPO market.
e.	It is possible for a firm to go public and yet not raise any additional new capital for the firm itself.
3. 	Which is a common way to compare financial ratios against other companies in the same industry?
    	a.     Time-Trend  
b.     Cross-sectional   
c.     Internal uses  
d.     Benchmark   
e.     None of the above
4.	Considered alone, which of the following would increase a company- current ratio?
a.	An increase in net fixed assets.
b.	An increase in accrued liabilities.
c.	An increase in notes payable.
d.	An increase in accounts receivable.
e.	An increase in accounts payable.
5.	Towson, Inc. currently has $1,600,000 in accounts receivables and its days sales outstanding (DSO) is 20 days. If accounts receivable comprise 50% of the company- current assets and Towson has $4,800,000 in net fixed assets, what is its total asset turnover ratio?
a.     2.651x        
b.     3.650x        
c.     3.520x        
d.     2.921x        
e.      3.920x




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