Quiz #1
Part I (13 points)
1. The 100% number in a Common-Sized Income Statement is:
A. TOTAL OPERATING EXPENSES
B. GROSS PROFIT
C. NET PROFIT
D. SALES (or REVENUES)
2. Net Working Capital (NWC) is defined as:
A. Book Value (BV) of current assets.
B. Cash Balance minus current liabilities.
C. Current Assets minus Current Liabilities.
D. Total Assets minus Liabilities
3. Which one of the following decreases a firm’s Net Income but does not decrease its Operating Cash Flow (OCF) if the firm owes no taxes for the current year?
A. Fixed Operating Expense
B. Variable Operating Expense
C. Depreciation Expense
E. Write Down of Accounts Receivable Account
4. Cash Flow From Assets (CFFA) is defined as:
A. Cash Flow to shareholders MINUS the cash flow to creditors.
B. Operating Cash Flow (OCF) PLUS Cash Flow to Creditors PLUS Cash Flow to Shareholders.
C. Operating Cash Flow (OCF) PLUS or MINUS the change (∆) in Net Working Capital (NWC) PLUS or MINUS Net Capital Spending.
D. Operating Cash Flow (OCF) PLUS Net Capital Spending PLUS the change (∆ )in Net Working Capital (NWC).
5. Which of the following category of standard financial ratios is related to a firm’s capital structure?
A. Short-term solvency or LIQUIDITY ratios
B. Long-term solvency or financial LEVERAGE ratios
C. Asset management or TURNOVER ratios
D. Profitability ratios (Return On)
E. Market value ratios
6. Which of the following IS NOT one of the THREE INDIVIUDAL RATIOS into which the DUPONT IDENTITY decomposes?