An increase in financial leverage generally results in a higher return on equity (ROE).

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A company’s return on assets should be greater than its return on equity.

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An optimal current ratio should be greater than 1.0.

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GoodTimes, Inc. has asset turnover of 0.5 times, a net profit margin of 10% and average total assets of $100, what is its net income (assuming no unusual items)?

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The answer cannot be determined with the information provided

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Common-size financial statements are constructed in order to:

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Adjust for inflation and risk


Facilitate comparisons of different-sized companies


To comply with SEC requirements


All of the above

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A company builds a new plant and finances its construction by issuing stock. Which ratio is least likely to be affected, all else being equal?

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Current ratio


Debt to equity ratio


Debt to asset ratio


Net fixed assets to total assets

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A company has net working capital of $0, current liabilities of $25 and total assets equal to $100. What is its current ratio?

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Analysis of a company’s financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer question 9.

Sales in 2003 were $10,000. Therefore, the compounded average growth rate is:


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Not enough information available

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The cash cycle measures the days required to produce finished goods or delivered services.

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In general, an increase in a liability is a source of funds.

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Spanish II (Preterite And Correct Use Of Conocer/Poder/Querer/Saber)

Write sentences using the information provided. Use the preterite and make any necessary changes.


yo / conocer / este / persona / hoy

Yo conocí a esta persona hoy.

1.  el presidente / no querer / hablar con los reporteros


2.  ¿cómo / saber / ustedes / lo que (what) / pasar / entre / Fabiana y Raúl?


3.  tú / conocer / señor Castillo / anteayer


4.  nosotros / no poder / comprar los regalos / porque / haber / mucho tráfico / en el centro


5.  después de / los exámenes, / Natalia / poder / relajarse


Fill in the blanks with the correct form of conocer, poder, querer, or saber.

1.  A Carlitos no le gustan nada las verduras y por eso no _____ comer el brocóli.

2.  —¿Conoce usted a mi esposa?

—Sí, la _____ el año pasado.

3.  Después de muchas horas de estudio, Federico _____ aprobar (pass) el examen.

4.  Yo _____ sorprender a Marisol el sábado, pero el viernes ella _____ todos mis planes.

Select the correct option.

1. Por fin (conocí, supe) por qué Marlene rompió con David. ¡Está enamorada de José Luis!

2.  Ana Milena (quiso, no pudo) llamarte ayer, pero no contestaste el teléfono.

3.  Santiago nunca me dijo cómo (conoció, supe) a su novia, pero sé que fue muy romántico.

4.  Mañana me gradúo de la universidad.  (Pude, no supe) terminar los estudios.

5.  Martín se jubiló el año pasado. (Quiso, no quiso) trabajar más.

6.  Durante la boda, Daniela no prestó atención. (Quiso, no pudo) sacar fotos.

Indicate whether each statement is lógico or ilógico.

  1. Teresa supo que hice una fiesta y no la invité. Ahora está enojada conmigo.
  2. lógico
  3. ilógico
  4. Busqué por horas, pero no encontré la casa de David. No quise visitarlo.
  5. lógico
  6. ilógico
  7. Leila se rió mucho durante la película; no pudo divertirse.
  8. lógico
  9. ilógico
  10. Mis padres se conocieron en Japón; por eso celebran sus aniversarios en Tokio.
  • lógico
  • ilógico

Fiin550 Fin560 Chap7 3. The Following Are The Monthly Rates Of Return For Madison Cookies And For Sophie Electric During A Six-Month Period. Compute The Following. A. Average Monthly Rate Of Return For Each Stock B. Standard Deviation Of Returns For Eac

Fiin550 fin560


3. The following are the monthly rates of return for Madison Cookies and for Sophie Electric during a six-month period.

Compute the following.

a. Average monthly rate of return for each stock

b. Standard deviation of returns for each stock

c. Covariance between the rates of return

d. The correlation coefficient between the rates of return

What level of correlation did you expect? How did your expectations compare with the computed correlation? Would these two stocks be good choices for diversification? Why or why not?

7. The following are monthly percentage price changes for four market indexes.

Compute the following.

a. Average monthly rate of return for each index

b. Standard deviation for each index

c. Covariance between the rates of return for the following indexes: DJIA–S&P 500 S&P 500–Russell 2000 S&P 500–Nikkei Russell 2000–Nikkei

d. The correlation coefficients for the same four combinations

e. Using the answers from parts (a), (b), and (d), calculate the expected return and standard deviation of a portfolio consisting of equal parts of (1) the S&P and the Russell 2000 and (2) the S&P and the Nikkei. Discuss the two portfolios.

8. The standard deviation of Shamrock Corp. stock is 19 percent. The standard deviation of Cara Co. stock is 14 percent. The covariance between these two stocks is 100. What is the correlation between Shamrock and Cara stock?

Finance Question: Help!

A firm is all equity financed with 10,000 outstanding shares with a market value of $20 each. Its net income was $30,000 and it decides to pay a cash dividend of $2000. Calculate the value of each share after the dividend payout.


a. $22.8

b. $20

c. $19.8

d. not enough information


Grandma’s Applesauce, Inc. has a 0.60 probability of a good year with operating cash flow of $50,000 and 0.40 probability of a bad year with operating cash flow of $30,000.  The company has a debt of $35,000 with 8 percent interest due next year.  Assuming the company has no means of servicing its debt other than operations, and a 0% tax rate, which of the following is true?


a. Shareholders expected claim is $12,200

b. Creditors expected claim is $37,800

c. Creditors expected claim is $35, 680

d. None of the above


The owners of a firm facing a high probability of bankruptcy prefer to invest in ____ projects, because ____.

a. safer; riskier projects make bankruptcy more likely

b. no new; the firm is likely to go bankrupt anyway

c. risky; the shareholders have little to lose and might win if successful

d. risky; creditors prefer taking a gamble rather than having the company default


You are trying to decide whether to accept or reject a one-year project.  The project is estimated to generate $5,000 in incremental gross profit, which includes $200 in depreciation.  Incremental SG&A expense is $400.  At a 35% tax rate, the after-tax incremental cash flow is:


a. $2,990

b. $3,190

c. $3,250

d. $3,510


What is the present value of a growing perpetuity that makes a paymet of $100 in the first year, which thereafter grows at 3% per year? Apply a discount rate of 7%.


a. 2,000

b. 3,500

c. 2,500

d. 4,000