Finance : Common-size balance sheets express each account value

Subject: Business    / Finance
Question
QUESTION 1

Common-size balance sheets express each account value as a percentage of which one of the following?

total sales

net income

total equity

total assets

QUESTION 2

Travis United has net income of $11,880 for 2010. On the firm’s common-size income statement for 2010, the net income is shown as 13.8 percent. What is the amount of the firm’s sales for 2010?
$87,814
$86,087
$1,714
$1,639

QUESTION 3

A firm has a profit margin of 4.40 percent, a return on assets of 9.80 percent, and total sales of $390,000. What is the capital intensity ratio?
2.23
0.37
0.45
2.70

QUESTION 4

Kato’s Corner has an average inventory balance of $41,400, total sales of $364,400, and cost of goods sold of $289,100. How long on average does it take the firm to sell its inventory?
41.47 days
66.93 days
52.27 days
65.44 days

QUESTION 5

Browning’s, Inc. has a capital intensity ratio of 0.55, a profit margin of 5.50 percent, and a debt-equity ratio of 0.61. What is the firm’s return on equity?
15.39 percent
7.31 percent
16.10 percent
6.10 percent

QUESTION 6

Black Stone Industries has a return on equity of 14.40 percent and a debt-equity ratio of 0.56. What is the firm’s return on assets?
10.43 percent
9.23 percent
11.20 percent
8.06 percent

QUESTION 7

Westover Mills has a return on equity of 12.30 percent, an equity multiplier of 1.20, and a payout ratio of 20 percent. What is the firm’s sustainable rate of growth?
10.91 percent
2.52 percent
11.53 percent
8.63 percent

QUESTION 8

Chubb’s Market has a return on equity of 15.00 percent, an equity multiplier of 1.50, and a payout ratio of 35 percent. What is the firm’s internal rate of growth?
6.95 percent
7.09 percent
10.80 percent
14.74 percent

QUESTION 9

SIC codes classify firms based on which one of the following?
business operations
total sales
geographic location
number of employees

QUESTION 10

Which of the following create problems when conducting financial statement analysis?
variation in accounting methods
inability of a firm to fit neatly into a specific industrial category
different fiscal years
All of the above are common problems.