eedback Module two practice quiz - This quiz does not contribute to your final gradeHelp
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Module 2 practice quiz - This quiz does not contribute to your final grade.
You can attempt this quiz as many times as you wish for practice purposes.
Question 1
Operating margin measures the:
Your Answer
Score
Operating income
Gross sales of the firm
Firms ability to sell a product for more than the direct and indirect costs
of production
Firms ability to sell a product
Corre
ct
1.00
Total
1.00 /
1.00
Question 2
Why do analysts often prefer to use ROA rather than ROE in their analysis?
Your Answer
Score
Exp
1.00
Cor
ROE includes equity
Assets are more important than equity
It is not as sensitive to the firms choice of leverage
Correct
ROA includes assets
Total
Question 3
1.00 / 1.00
When would Price/Earnings ratio equal earnings per share?
Your Answer
Score
Exp
1.00
Cor
Always
Only when share price equals EPS
Never
Only when net income equals market capitalization
Total
Correct
1.00 / 1.00
Question 4
A fast-track analyst price/earnings forecast depends crucially on:
Your Answer
Where the company operates
Score
Ex
The stability of the Price/Earnings ratio
Correct
1.00
Cor
The analyst who forecasted the Price/Earnings ratio
Whether the company just listed or not
Total
1.00 / 1.00
Question 5
Debt investors generally want the firm to:
Your Answer
invest only in risk-free assets
invest in projects that are not too risky relative to the average risk of
projects in place
Invest in very risky projects
Score
Avoid risky projects
Corre
1.00
ct
Total
1.00 /
1.00
Question 6
If the interest coverage ratio increases from one year to the next, the interest expense for the firm
must have fallen.
Your Answer
Score
Explanation
1.00
Correct
True
False
Total
Correct
1.00 / 1.00
Question 7
What do we divide cost of goods sold by in order to estimate a firms inventory turnover?
Your Answer
Score
Explanatio
Sales
(average) Inventory
Correct
1.00
Cost of goods sold
365
Total
1.00 / 1.00
Question 8
What is divided by the accounts receivable ratio in order to estimate a firms average collection
period (in days)?
Your Answer
Accounts receivable turnover
Sales
Score
Explan
(average) Accounts receivable
365
Correct
Total
1.00
Correct
1.00 / 1.00
Question 9
The quick ratio equals:
Your Answer
(Cash and near cash)/Current liabilities
Current assets/Current liabilities
Gross profit/Sales
Sales/Total assets
Correct
Score
Expla
1.00
Corre
Total
1.00 / 1.00
Question 10
What is a potential drawback of liquidity measures?
Your Answer
Score
E
n
1.00
They only take into account cash transactions
They dont take into account non-current assets
They dont take into account non-current liabilities
They dont take into account cash generated by ongoing
Correct
operations
Total
1.00 / 1.00
