11/14/21, 4:37 PM Assignment Print View

 
 1. Award: 10.00 points  

The following groups are stakeholders of a public company:

1. shareholders;
2. bankers;
3. suppliers;
4. employees;
5. bondholders;
6. management

 I and II only

 I, II, and III only

 I, II, III, and IV only

 I, II, III, IV, V, and VI

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-01 Financial Ratios.

https://ezto.mheducation.com/hm_finance.tpx 1/9
11/14/21, 4:37 PM Assignment Print View
 
 2. Award: 10.00 points  

Assets are listed on the balance sheet in order of

 decreasing liquidity.

 increasing size and relative life.

 decreasing size.

 relative life.

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

 
 3. Award: 10.00 points  

The following are known as current assets:

 cash, marketable securities, and receivables.

 cash, marketable securities, receivables, and inventories.

 marketable securities, receivables, inventories, and payables.

 receivables, inventories, and payables.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-01 Financial Ratios.

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11/14/21, 4:37 PM Assignment Print View
 
 4. Award: 10.00 points  

The difference between total assets of a firm and its total liabilities is called

 net working capital.

 net current assets.

 net worth.

 net liabilities.

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

 
 5. Award: 10.00 points  

Inventory consists of:

 finished goods.

 raw material and finished goods.

 raw material, work in process, and prepaid rent.

 raw material, work in process, and finished goods.

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

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11/14/21, 4:37 PM Assignment Print View
 
 6. Award: 10.00 points  

The difference between current assets of a firm and its current liabilities is called

 net tangible fixed assets.

 net working capital.

 gross working capital.

 net worth.

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

 
 7. Award: 10.00 points  

Net working capital (NWC) is calculated as

 total assets - total liabilities.

 current assets + current liabilities.

 current assets - current liabilities.

 current liabilities - current assets.

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

https://ezto.mheducation.com/hm_finance.tpx 4/9
11/14/21, 4:37 PM Assignment Print View
 
 8. Award: 10.00 points
 

Earnings before interest and taxes are calculated as

 total revenues − costs.

 total revenues − costs − depreciation.

 total revenues − costs + depreciation - taxes.

 total revenues − costs − depreciation − taxes.

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

 
 9. Award: 10.00 points  

Which of the following costs are not accounted for on the income statement?

 Direct labor

 Indirect labor

 Opportunity cost

 Legal costs

References

Multiple Choice Difficulty: 1 Easy Learning Objective: 28-01 Financial Ratios.

https://ezto.mheducation.com/hm_finance.tpx 5/9
11/14/21, 4:37 PM Assignment Print View
 
 10. Award: 10.00 points
 

Equity investors have contributed $250,000 to your start-up business, while creditors provided a loan
of $300,000. You have calculated your firm's WACC at 10 percent. The annual interest payment is
$25,000 and the marginal corporate tax rate is 21 percent. How much profit will your equityholders
need to earn in order to break even in economic terms (i.e., EVA of zero)?

 $25,000

 $35,250

 $30,000

 $13,075

Total capitalization = 250,000 + 300,000 = 550,000. Required return on capital = 550,000 × 10% =
55,000. 55,000 − [(1 − 0.21) × 25,000] = $35,250.

Note that: Rd = $25,000/$300,000 = 8.33%. Re = $35,250/$250,000 = 14.1%. WACC = 54.54% × (1 −

0.21) × 8.33% + 45.45% × 14.1% =10%.

References

Multiple Choice Difficulty: 3 Hard Learning Objective: 28-02 Financial

Statements.

https://ezto.mheducation.com/hm_finance.tpx 6/9
11/14/21, 4:37 PM Assignment Print View
 
 11. Award: 10.00 points
 

If the debt ratio is 0.5, what is the debt-equity ratio? (Assume no leases.)

 0.5

 1.00

 2.00

 4.00

Debt ratio = D/(D + E) = 0.5; D/E = 1.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-07 Measuring

Leverage.

 
 12. Award: 10.00 points  

Which of the following is an example of a leverage ratio?

 Debt-equity ratio

 Quick ratio

 Market to book ratio

 Return on equity

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-07 Measuring

Leverage.

https://ezto.mheducation.com/hm_finance.tpx 7/9
11/14/21, 4:37 PM Assignment Print View
 
 13. Award: 10.00 points  

Assume the following data: Long-term debt = 100; Value of leases = 20; Book value of equity = 80.
Calculate the debt ratio.

 0.50

 0.55

 0.56

 0.60

Debt ratio = (100 + 20)/(100 + 20 + 80) = 0.6.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-07 Measuring

Leverage.

 
 14. Award: 10.00 points  

Assume the following data: Long-term debt = 100; Value of leases = 20; Book value of equity = 80.
Calculate the debt-equity ratio.

 0.50

 0.60

 1.00

 1.50

D/E = 120/80 = 1.5.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-07 Measuring

Leverage.

https://ezto.mheducation.com/hm_finance.tpx 8/9
11/14/21, 4:37 PM Assignment Print View
 
 15. Award: 10.00 points  

Assume the following data: EBIT = 100; Depreciation = 40; Interest = 20; Dividends = 10. Calculate the
cash coverage ratio.

 7.0

 5.0

 4.7

 14.0

Cash coverage ratio = (100 + 40)/20 = 7.

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-07 Measuring

Leverage.

 
 16. Award: 10.00 points  

Which of the following is an example of a liquidity ratio?

 Times interest earned (TIE)

 P/E ratio

 Return on equity

 Quick ratio

References

Multiple Choice Difficulty: 2 Medium Learning Objective: 28-08 Measuring

Liquidity.

https://ezto.mheducation.com/hm_finance.tpx 9/9