Question 1

Which of the following would, generally, indicate an improvement in a company's financial position, holding other things constant?

Accepted Answer

A)   The total assets turnover decreases.
B)   The TIE declines.
C)   The DSO increases.
D)   The EBITDA coverage ratio increases.
E)   The current and quick ratios both decline.F) C) and D)
G) A) and E)

Question 2

The "apparent, " but not the "true, " financial position of a company whose sales are seasonal can differ dramatically, depending on the time of year when the financial statements are constructed.

Accepted Answer

A) True 
 B)False

Question 3

If a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be CORRECT?

Accepted Answer

A)   Other things held constant, the lower the current ratio, the lower the interest rate the bank would charge the firm.
B)   The lower the company's EBITDA coverage ratio, other things held constant, the lower the interest rate the bank would charge the firm.
C)   Other things held constant, the higher the debt ratio, the lower the interest rate the bank would charge the firm.
D)   Other things held constant, the lower the debt ratio, the lower the interest rate the bank would charge the firm.
E)   The lower the company's TIE ratio, other things held constant, the lower the interest rate the bank would charge the firm.F) B) and C)
G) B) and D)

Question 4

Suppose a firm wants to maintain a specific TIE ratio.It knows the amount of its debt, the interest rate on that debt, the applicable tax rate, and its operating costs.With this information, the firm can calculate the amount of sales required to achieve its target TIE ratio.

Accepted Answer

A) True 
 B)False

Exam 3: Analysis of financial statements

The "apparent, " but not the "true, " financial position of a company whose sales are seasonal can differ dramatically, depending on the time of year when the financial statements are constructed.

Correct Answer
verified

Suppose a firm wants to maintain a specific TIE ratio.It knows the amount of its debt, the interest rate on that debt, the applicable tax rate, and its operating costs.With this information, the firm can calculate the amount of sales required to achieve its target TIE ratio.

Correct Answer
verified

Which of the following would, generally, indicate an improvement in a company's financial position, holding other things constant?

Correct Answer
verified

If a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be CORRECT?

Correct Answer
verified

Exam 3: Analysis of financial statements

The "apparent, " but not the "true, " financial position of a company whose sales are seasonal can differ dramatically, depending on the time of year when the financial statements are constructed.

Correct AnswerverifiedShow Answer

Suppose a firm wants to maintain a specific TIE ratio.It knows the amount of its debt, the interest rate on that debt, the applicable tax rate, and its operating costs.With this information, the firm can calculate the amount of sales required to achieve its target TIE ratio.

Correct AnswerverifiedShow Answer

Which of the following would, generally, indicate an improvement in a company's financial position, holding other things constant?

Correct AnswerverifiedShow Answer

If a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be CORRECT?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified