Chapter 4 Evaluating a Firm's Financial Performance

63) Based on the information in Table 4-2, the current ratio is

A) 2.97.

B) 2.46.

C) 2.35.

D) 2.23.

64) Based on the information in Table 4-2, the acid-test ratio is

A) 1.17.

B) 1.33.

C) 1.39.

D) 2.15.

65) Based on the information in Table 4-2, the average collection period is

A) 70 days.

B) 81 days.

C) 89 days.

D) 127 days.

66) Based on the information in Table 4-2, the debt ratio is

A) 28.12%.

B) 34.74%.

C) 45.69%.

D) 42.03%.

67) Based on the information in Table 4-2, the return on equity is

A) 19.33%.

B) 18.47%.

C) 16.66%.

D) 15.65%.

68) Based on the information in Table 4-2, and assuming the company's stock price is $50 per share, the P/E ratio is

A) 10.89.

B) 14.33.

C) 24.44.

D) 27.50.

69) Based on the information in Table 4-2, the times interest earned ratio is

A) 11.48.

B) 5.25.

C) 4.88.

D) 8.65.

Please refer to Table 4-3 for the following questions.

Table 4-3

Emery Corporation

Balance Sheet		Income Statement
Assets:
Cash	$250,000		Sales (all credit)	$8,000,000
Accounts receivable	450,000		Cost of goods sold	(4,000,000)
Inventory	500,000		Operating expense	(2,900,000)
Net fixed assets	2,100,000		Interest expense	(150,000)
Total assets	$3,300,000		Income taxes	(380,000)
			Net income	$570,000
Liabilities and owners' equity:
Accounts payable	$100,000
Notes payable	450,000
Long-term debt	1,050,000
Owners' Equity	1,700,000
Total liabilities and owner's equity	$3,300,000

70) Based on the information in Table 4-3, the average collection period is

A) 38.01 days.

B) 27.36 days.

C) 20.53 days.

D) 17.49 days.

71) Based on the information in Table 4-3, the operating return on total assets is

A) 55.62%.

B) 10.06%.

C) 44.74%.

D) 33.33%.

72) Based on the information in Table 4-3, the operating profit margin is

A) 13.75%.

B) 18.59%.

C) 25.80%.

D) 33.33%.