# Quiz 1 for corporate finance

Question 1 12.5 pts

Which ratio below would give the best sense of the overall efficiency of the firm?

 Fixed Asset Turnover
 Total Asset Turnover (TATO)
 Total Debt to Total Assets
 Current Ratio
 Inventory Turnover

Question 2 12.5 pts

If the return on assets for a firm is 14.5% and the firm is financed with 50% debt and 50% equity, what is the return on equity?

 7.25%
 not enough information
 29.0%
 19.5%

Question 3 12.5 pts

If the “debt to equity” ratio is 2.2, what is the “debt to assets” ratio?

 0.6875
 2.2
 3.2

Question 4 12.5 pts

From Problem 2.15:

Cash  47,250
Short term investments 3,800
Accounts Receivable 283,500
Inventories 141,750
Total Current Assets 476,300

Total Assets  807,500

What is the common size number for Inventories?

 14.175
 not enough information
 17.56
 80.71

Question 5 12.5 pts

If inventories grew from 135,000 to 141,750 over the 2009 to 2010 years, what was the percentage increase in inventories?

 1.05%
 not enough information
 105%
 5.0%

Question 6 12.5 pts

What is the Days Sales Outstanding for a firm with the following information (assume 365 day year):

Sales: 900

COGS: 500

Depreciation:  100

Interest:  50

Inventory:  100

Accounts Receivable:  150

 2.47 days
 60.83 days
 40.56 days
 Not enough information
 0.167 days

Question 7 12.5 pts

What is inventory turnover for a firm with the following information.  Use the formula with COGS instead of Sales:

Sales: 900

COGS: 500

Depreciation:  100

Interest:  50

Inventory:  100

Accounts Receivable:  150

 3
 5
 6
 4

Question 8 12.5 pts

What are the three “levers” for Return on Equity?  That is, what three ratios can be used to calculate return on equity?

 profit margin, total asset turnover and equity multiplier
 profit margin, debt ratio and return on assets
 inventory turnover, debt to equity and leverage
 profitability, efficiency and market value ratios

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