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Multiple Choice Question 53
Which one of the following statements about trend analysis is NOT correct?
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This benchmark is based on a firm’s historical performance.
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The Standard Industrial Classification (SIC) System is used to identify benchmark firms.
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All of these are true statements.
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It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm.
| Multiple Choice Question 68 |
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Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio?
Multiple Choice Question 68
Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars.
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$1,715 million
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$1,651 million
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$1,191 million
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$1,421 million
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Multiple Choice Question 46
Coverage ratios, like times interest earned and cash coverage ratio, allow
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a firm’s creditors to assess how well the firm will meet its interest obligations.
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a firm’s creditors to assess how well the firm will meet its short-term liabilities other than interest expense.
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a firm’s shareholders to assess how well the firm will meet its short-term liabilities.
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| Multiple Choice Question 54 |
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Peer group analysis can be performed by
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a) management choosing a set of firms that are similar in size or sales, or who compete in the same market.
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b) using the average ratios of this peer group, which would then be used as the benchmark.
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c) identifying firms in the same industry that are grouped by size, sales, and product lines, in order to establish benchmark ratios.
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d) Only a and b relate to peer group analysis.
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| Multiple Choice Question 61 |
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Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales of $3,436,812, what is its level of receivables?
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