1.

The rate of interest payable on a bond is also called

a. Internal Rate of Return

b. Coupon Rate

c. Yield to Maturity

d. Effective Rate of Interest

2. Which of the following is a feature of zero-coupon bonds?

a. Sold at Par

b. Sold at premium

c. Pays no Interest

d. Not Redeemable

3. Current ratio is 4:1. Net Working Capital is 30,000 JD. Find the amount of current Assets.

a. 40,000

b. 6,000

c. 10,000

d. 24,000

4. A firm's fixed costs are $54,000, and it sold 350 units at $140 each. The total variable
costs were $35,000. The net income or loss of the firm was:

a. $ 9,000 loss

b. $40,000 loss

c. $14,000 income

d. $40,000 income

‫طريقة الحل‬
total costs = fixed + variable = 54,000+ 35,000 = 89,000

income = units*price = 350*140 = 49,000

net income = income – costs = 49,000 – 89,000= -40,000

 5. An account entitled Unearned Fees would be classified as a/an

a. revenue account

b. expense account

c. asset account

d. liability account

‫يعني اندفع سعر الخدمة من المريض ولكن لسا ما قدمتها‬

6. Principal value of a bond is called the

a. Market Price

b. Maturity Value

c. Issue Price

d. Par Value

7. Which asset-liability combination would most likely result in the firm's having the
greatest risk of technical insolvency?

a. Reducing current assets, increasing current liabilities, and reducing long-term debt.

b. Increasing current assets while incurring more current liabilities.

c. Increasing current assets while lowering current liabilities.

d. Replacing short-term debt with equity.

8. A bond is said to be issued at premium when

a. Coupon rate>Required returns

b. Coupon rate=Required returns

c. Coupon rate

d. None of the above

)‫)يعني نسبة الدفع للمستفيدين اكبر من القيمة المراد تحصيلها‬

9. For $1,000 you can purchase a 5-year ordinary annuity that will pay you a yearly
payment of $263.80 for 5 years. The compound annual interest rate implied by this
arrangement is closest to

a. 10 percent. 𝑷𝑽𝒐𝒇 𝒂𝒏 𝒂𝒏𝒏𝒖𝒊𝒕𝒚 = 𝑷𝑴𝑻 𝑿 𝑷𝑽𝑭𝑨

b. 8 percent. so
c. 9 percent. $1,000 = $263.80 (PVFA i%, 5)
d. 11 percent.
 10. Liquidity and efficiency, solvency, profitability, and market are called the building blocks
of analysis.

Select one:

True

False

11. A pharmaceutical company sells a product for $6.25. The variable costs are $3.75. The
break-even units are 35,000. What is the amount of fixed costs?

a. $ 87,500

b. $ 35,000

c. $104,750

d. $131,250

12. A hospital has negotiated a $500,000 revolving credit agreement with a National Bank.
The agreement calls for an interest rate of 10% on fund used, a 15% compensating balance, and
a commitment fee of 1% on the unused amount of the credit line. Assuming that the
compensating balance would not otherwise be maintained, the effective annual interest cost if
the firm borrows $200,000 for one year is closest to

a. 11.5 percent.

b. 13.53 percent.

c. 15 percent.

d. 26.5 percent.

Interest = 0.10(200,000) = 20,000

Commitment fee= 0.01(500,000-200,000) = 3,000

Amount borrowed – compensating balance = 200,000 – (0.15*200,000) = 170,000

annual interest cost = (20,000 + 3,000) / 170,000 = 0.1353

 13. You are considering borrowing $10,000 for 3 years at an annual interest rate of 6%. The
loan agreement calls for 3 equal payments, to be paid at the end of each of the next 3 years.
(Payments include both principal and interest.) The annual payment that will fully pay off
(amortize) the loan is closest to

a. $3,741. (‫)مطلوب اقرب رقم للجواب‬

b. $4,020.

c. $2,890.

d. $2,674.

three equal payments =10000 /3 =3333

first year interest amount =10000*0.06= 600

second year interest amount =6667*0.06= 400

third year interest amount =3334*0.06= 200

Total interest amount = 1200 and total payments with interests =10000+1200 = 11200

3 equal installments =11200 /3 =3733

14. In last year the current ratio was 3:1 and quick ratio was 2:1. Presently, current ratio is
3:1 but quick ratio is 1:1. This indicates comparably.

a. lower stock

b. high liquidity

c. low liquidity

d. higher stocks.

quick ratio is the current assets excluding the inventories. It gives an idea of the current assets that can
be rapidly liquidated to take care of the current liabilities. It is a more reliable indicator of working
capital liquidity compared to quick ratio because the quick ratio excludes inventory which is normally
illiquid. Hence if the liquidity ratio is falling while current ratio is same, it is a sign of rising inventory
levels on a relative basis.

‫ قد‬inventory‫ ف هذا دليل ان ال‬، 1:1 ‫ ال‬2:1 ‫ وقد قلت قيمته من‬،‫ من المعادلة‬inventory‫ يستثني ال‬quick ratio‫يعني بما ان ال‬
.‫زادت‬
 15. You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20
years. You expect annual interest rates will be 8 percent over that time period. The maximum
price you would be willing to pay for the annuity is closest to

a. 32,000.

b. 40,000.

c. 80,000.

d. 39,272.

PVA = 4,000 (PVFA at 8% for 20 periods)

PVA= 4,000 (9.818) = 39,272.

16. A health care center paid the rent for the month of January on January 1. Recording the
transaction requires

a. an asset to be debited, a revenue to be credited

b. an asset to be debited, a liability to be credited

c. a liability to be debited, an asset to be credited

d. an expense to be debited, an asset to be credited

17. According to the following information, which of the following statements is true?

Assets 2019 2018 2017 2016

Cash $10,000 $15,000 $12,000 $8,000

Other current $18,000 $15,000 $13,000 $10,000

assets

Plant and $20,000 $23,000 $24,000 $15,000

equipment

Total assets $48,000 $53,000 $49,000 $33,000

a. Cash was always the same percentage of total assets

b. Cash increased at a faster rate than total assets from 2016 to 2019

c. Cash had the greatest percentage decrease between 2018 and 2019 ‫مو اكيد ولكن ممكن‬

d. Plant and equipment had the largest percentage gain from 2016 to 2018
 18. When n = 1, this interest factor equals one for any positive rate of interest.

a. PVIF

b. FVIF

c. FVIFA

d. PVIFA

19. According to the following information, which of the following is true?

Current assets $120,000

Cash $20,000
Accounts receivable $45,000
Short-term investments $12,000
Merchandise inventory $42,000
Current liabilities $68,000

a. Working capital is $10,000, acid-test ratio is 1.15

b. Working capital is 52,000, current ratio is 1.76

20. Which of the following statements is correct?

a. Interest Coverage Ratio Depends Upon Tax Rate
b. Lower Debt-Equity Ratio Means Lower Financial Risk
c. Increase In Net Profit Ratio Means Increase In Sales
d. A Higher Receivable Turnover In Not Desirable

21. A hospital purchased a three-year insurance policy. Recording the purchase of the policy
requires
a. A liability to be debited, an asset to be credited
b. Withdrawals to be debited, an asset to be credited
c. One asset to be debited, another asset to be credited
d. An asset to be debited, a liability to be credited

22. Merchandise with a list price of $2,000 is sold with a trade discount of 30% and cash
terms of 2/10, n/30. If the merchandise is paid for within the discount period, the total cost will
be $1,372
a. True
b. False
 23. A hospital has a debt equity ratio of 1.5 as compared to 1.3 industry average. It means
that the firm has

a) Higher Liquidity
b) Higher Financial Risk
c) Higher Profitability
d) Higher Capital Employed

24. Higher the ratio, the more favorable it is, doesn’t stand true for

a. Operating ratio

b. Liquidity ratio

c. Net profit ratio

d. Stock turnover ratio

25. The lower turnover ratio highlights the under utilizations of the resources accessible at
the disposal of the firm

a. True
b. False

26. Return on Assets and return on investment Ratios belong to:

a. Liquidity Ratios
b. Solvency ratios
c. Profitability ratios
d. Turnover

27. In common size statements, each item is expressed as a percentage of some common
item (total).
a. True
b. False

28. Times interest earned ratio enables customers to evaluate a hospital’s ability to
generate the earnings necessary to meet interest expense requirements.
a. True
b. False
29. Which of the following is a measure of Debt service Capacity of a firm?
a. Interest Coverage Ratio
b. Debtors Turnover
c. Acid test ratio
d. Current ratio

30. A liquidity ratio of 2.0 tells us that the organization has

a. $2 in liquid assets for each $1 in total liabilities
b. $2 in liquid assets for each $1 of total expense
c. $2 in liquid assets for each $1 in net assets
d. $2 in liquid assets for each $1 in current liabilities

31. Operating margin ratio measures:

a. Total operating expenses incurred from providing patient care services
b. How dependent the organization is on patient related income
c. How much profit is earned for each dollar invested in assets
d. Profits earned from the organization’s main line of business

32. Which ratio is considered as safe margin of solvency?

a. Current ratio
b. Quick ratio
c. Liquid ratio
d. None of the above