general business data bank

1. Activities of a firm which require the spending of cash are known as:
A. sources of cash.
B. uses of cash.
C. cash collections.
D. cash receipts.
E. cash on hand.

2. The sources and uses of cash over a stated period of time are reflected on the:
A. income statement.
B. balance sheet.
C. tax reconciliation statement.
D. statement of cash flows.
E. statement of operating position.

3. A common-size income statement is an accounting statement that expresses all of a firm's expenses as percentage of:
A. total assets.
B. total equity.
C. net income.
D. taxable income.
E. sales.

4. Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a common point in time?
A. statement of standardization
B. statement of cash flows
C. common-base year statement
D. common-size statement
E. base reconciliation statement

5. Relationships determined from a firm's financial information and used for comparison purposes are known as:
A. financial ratios.
B. identities.
C. dimensional analysis.
D. scenario analysis.
E. solvency analysis.

6. The formula which breaks down the return on equity into three component parts is referred to as which one of the following?
A. equity equation
B. profitability determinant
C. SIC formula
D. Du Pont identity
E. equity performance formula

7. The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:
A. NASDAQ 100.
B. Standard & Poor's 500.
C. Standard Industrial Classification code.
D. Governmental ID code.
E. Government Engineered Coding System.

8. Which one of the following is a source of cash?
A. increase in accounts receivable
B. decrease in notes payable
C. decrease in common stock
D. increase in accounts payable
E. increase in inventory

9. Which one of the following is a use of cash?
A. increase in notes payable
B. decrease in inventory
C. increase in long-term debt
D. decrease in accounts receivables
E. decrease in common stock

10. Which one of the following is a source of cash?
A. repurchase of common stock
B. acquisition of debt
C. purchase of inventory
D. payment to a supplier
E. granting credit to a customer

11. Which one of the following is a source of cash?
A. increase in accounts receivable
B. decrease in common stock
C. decrease in long-term debt
D. decrease in accounts payable
E. decrease in inventory

12. On the Statement of Cash Flows, which of the following are considered financing activities?
I. increase in long-term debt
II. decrease in accounts payable
III. interest paid
IV. dividends paid
A. I and IV only
B. III and IV only
C. II and III only
D. I, III, and IV only
E. I, II, III, and IV

13. On the Statement of Cash Flows, which of the following are considered operating activities?
I. costs of goods sold
II. decrease in accounts payable
III. interest paid
IV. dividends paid
A. I and III only
B. III and IV only
C. I, II, and III only
D. I, III, and IV only
E. I, II, III, and IV

14. According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.
A. decrease; operating
B. decrease; financing
C. increase; operating
D. increase; financing
E. increase; investment

15. According to the Statement of Cash Flows, an increase in interest expense will _____ the cash flow from _____ activities.
A. decrease; operating
B. decrease; financing
C. increase; operating
D. increase; financing
E. increase; investment

16. On a common-size balance sheet all accounts are expressed as a percentage of:
A. sales for the period.
B. the base year sales.
C. total equity for the base year.
D. total assets for the current year.
E. total assets for the base year.

17. On a common-base year financial statement, accounts receivables will be expressed relative to which one of the following?
A. current year sales
B. current year total assets
C. base-year sales
D. base-year total assets
E. base-year accounts receivables

18. A firm uses 2008 as the base year for its financial statements. The common-size, base-year statement for 2009 has an inventory value of 1.08. This is interpreted to mean that the 2009 inventory is equal to 108 percent of which one of the following?
A. 2008 inventory
B. 2008 total assets
C. 2009 total assets
D. 2008 inventory expressed as a percent of 2008 total assets
E. 2009 inventory expressed as a percent of 2009 total assets

19. Which of the following ratios are measures of a firm's liquidity?
I. cash coverage ratio
II. interval measure
III. debt-equity ratio
IV. quick ratio
A. I and III only
B. II and IV only
C. I, III, and IV only
D. I, II, and III only
E. I, II, III, and IV

20. An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values.
A. increase in the cash ratio
B. increase in the net working capital to total assets ratio
C. decrease in the quick ratio
D. decrease in the cash coverage ratio
E. increase in the current ratio

21. An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?
A. accounts payable
B. cash
C. inventory
D. accounts receivable
E. fixed assets

22. A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?
A. current
B. cash
C. debt-equity
D. quick
E. total debt

23. A firm has an interval measure of 48. This means that the firm has sufficient liquid assets to do which one of the following?
A. pay all of its debts that are due within the next 48 hours
B. pay all of its debts that are due within the next 48 days
C. cover its operating costs for the next 48 hours
D. cover its operating costs for the next 48 days
E. meet the demands of its customers for the next 48 hours

24. Over the past year, the quick ratio for a firm increased while the current ratio remained constant. Given this information, which one of the following must have occurred? Assume all ratios have positive values.
A. current assets increased
B. current assets decreased
C. inventory increased
D. inventory decreased
E. accounts payable increased

25. Ratios that measure a firm's financial leverage are known as _____ ratios.
A. asset management
B. long-term solvency
C. short-term solvency
D. profitability
E. book value

26. Which one of the following statements is correct?
A. If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0.
B. Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5.
C. The debt-equity ratio can be computed as 1 plus the equity multiplier.
D. An equity multiplier of 1.2 means a firm has $1.20 in sales for every $1 in equity.
E. An increase in the depreciation expense will not affect the cash coverage ratio.

27. If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?
A. 0.0
B. 0.5
C. 1.0
D. 1.5
E. 2.0

28. The cash coverage ratio directly measures the ability of a firm's revenues to meet which one of its following obligations?
A. payment to supplier
B. payment to employee
C. payment of interest to a lender
D. payment of principle to a lender
E. payment of a dividend to a shareholder

29. Jasper United had sales of $21,000 in 2008 and $24,000 in 2009. The firm's current accounts remained constant. Given this information, which one of the following statements must be true?
A. The total asset turnover rate increased.
B. The days' sales in receivables increased.
C. The net working capital turnover rate increased.
D. The fixed asset turnover decreased.
E. The receivables turnover rate decreased.

30. The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level. Assume that both the cost per unit and the selling price per unit also remained constant. This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?
A. decrease in the inventory turnover rate
B. decrease in the net working capital turnover rate
C. no change in the fixed asset turnover rate
D. decrease in the day's sales in inventory
E. no change in the total asset turnover rate