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FOUNDATIONS OF BUSINESS FINANCE (PEREGRINE)
EXAM AND PRACTICE EXAM NEWEST ACTUAL EXAM
COMPLETE 160 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+|| LATEST EXAM!!!
__________ __________ measure the proportion of total
assets financed by a firm's creditors. The higher this ratio,
the greater is the firm's reliance on borrowed money to
finance its activities. - ANSWER-Debt ratios
A close cousin of the debt ratio is the __________-
__________-__________ __________, sometimes called
the __________ __________. This ratio is calculated as
total assets divided by common stock equity. - ANSWER-
assets-to-equity ratio, equity multiplier
A high equity multiplier indicates __________ debt and
__________ equity, whereas a low equity multiplier
indicates __________ debt and __________ equity. -
ANSWER-(1) high, low
(2) low, high
A measure that focuses solely on a firm's long-term debt is
the __________-__________-__________ __________. It
is calculated as long-term debt divided by stockholders'
equity. - ANSWER-debt-to-equity ratio
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Both the debt ratio and the debt-to-equity ratio use
__________ __________ of debt, equity, and assets. -
ANSWER-book values
The __________ __________ __________ __________
measures a firm's ability to make contractual interest
payments. It equals earnings before interest and taxes
divided by interest expense. A higher ratio indicates a
greater capacity to meet scheduled payments. -
ANSWER-times interest earned ratio
The __________ __________ __________ measures the
percentage of each sales dollar remaining after a firm has
paid for its goods. - ANSWER-gross profit margin
The __________ __________ __________ measures the
percentage of each sales dollar remaining after deducting
all costs and expenses including interest, taxes, and
preferred stock dividends. These vary widely across
industries, so comparing a company's figure to industry
averages is an important part of the performance analysis.
- ANSWER-net profit margin
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__________ __________ __________ is probably the
most closely watched financial ratio, which the investing
public considers to be a primary indicator of corporate
success. These represent the number of dollars earned on
behalf of each outstanding share of common stock during
the period. - ANSWER-Earnings per share
__________ __________ __________ __________, often
called __________ __________ __________, measures
management's overall effectiveness in using a firm's
assets to generate returns to common stockholders. -
ANSWER-Return on total assets, return on investment
__________ __________ __________ __________,
captures the return earned on the common stockholders'
(owners') investment in a firm. - ANSWER-return on
common equity
The __________/__________ __________ measures the
amount investors are currently willing to pay for each
dollar of the firm's current earnings. - ANSWER-
price/earnings ratio
Short-term debt - ANSWER-Debt with a maturity of 1 year
or less
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Treasury bills (T-bills) - ANSWER-Discounted securities
issued by the U.S. government to finance operations
Repurchase agreement (repo) - ANSWER-An
arrangement in which one firm sells some of its financial
assets to another firm with a promise to repurchase the
securities at a higher price at a later date
Commercial paper - ANSWER-A type of promissory note,
or legal IOU, issued by large, financially sound firms
Eurodollar deposit - ANSWER-A deposit in a bank outside
the United States that is not converted into the currency of
the foreign country; instead, it is denominated in U.S.
dollars
Long-term debt - ANSWER-Debt instruments with
maturities greater than 1 year
Term loan - ANSWER-A contract under which a borrower
agrees to make a series of interest and principal payments
on specific dates to the lender
FOUNDATIONS OF BUSINESS FINANCE (PEREGRINE)
EXAM AND PRACTICE EXAM NEWEST ACTUAL EXAM
COMPLETE 160 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+|| LATEST EXAM!!!
__________ __________ measure the proportion of total
assets financed by a firm's creditors. The higher this ratio,
the greater is the firm's reliance on borrowed money to
finance its activities. - ANSWER-Debt ratios
A close cousin of the debt ratio is the __________-
__________-__________ __________, sometimes called
the __________ __________. This ratio is calculated as
total assets divided by common stock equity. - ANSWER-
assets-to-equity ratio, equity multiplier
A high equity multiplier indicates __________ debt and
__________ equity, whereas a low equity multiplier
indicates __________ debt and __________ equity. -
ANSWER-(1) high, low
(2) low, high
A measure that focuses solely on a firm's long-term debt is
the __________-__________-__________ __________. It
is calculated as long-term debt divided by stockholders'
equity. - ANSWER-debt-to-equity ratio
,2|Page
Both the debt ratio and the debt-to-equity ratio use
__________ __________ of debt, equity, and assets. -
ANSWER-book values
The __________ __________ __________ __________
measures a firm's ability to make contractual interest
payments. It equals earnings before interest and taxes
divided by interest expense. A higher ratio indicates a
greater capacity to meet scheduled payments. -
ANSWER-times interest earned ratio
The __________ __________ __________ measures the
percentage of each sales dollar remaining after a firm has
paid for its goods. - ANSWER-gross profit margin
The __________ __________ __________ measures the
percentage of each sales dollar remaining after deducting
all costs and expenses including interest, taxes, and
preferred stock dividends. These vary widely across
industries, so comparing a company's figure to industry
averages is an important part of the performance analysis.
- ANSWER-net profit margin
,3|Page
__________ __________ __________ is probably the
most closely watched financial ratio, which the investing
public considers to be a primary indicator of corporate
success. These represent the number of dollars earned on
behalf of each outstanding share of common stock during
the period. - ANSWER-Earnings per share
__________ __________ __________ __________, often
called __________ __________ __________, measures
management's overall effectiveness in using a firm's
assets to generate returns to common stockholders. -
ANSWER-Return on total assets, return on investment
__________ __________ __________ __________,
captures the return earned on the common stockholders'
(owners') investment in a firm. - ANSWER-return on
common equity
The __________/__________ __________ measures the
amount investors are currently willing to pay for each
dollar of the firm's current earnings. - ANSWER-
price/earnings ratio
Short-term debt - ANSWER-Debt with a maturity of 1 year
or less
, 4|Page
Treasury bills (T-bills) - ANSWER-Discounted securities
issued by the U.S. government to finance operations
Repurchase agreement (repo) - ANSWER-An
arrangement in which one firm sells some of its financial
assets to another firm with a promise to repurchase the
securities at a higher price at a later date
Commercial paper - ANSWER-A type of promissory note,
or legal IOU, issued by large, financially sound firms
Eurodollar deposit - ANSWER-A deposit in a bank outside
the United States that is not converted into the currency of
the foreign country; instead, it is denominated in U.S.
dollars
Long-term debt - ANSWER-Debt instruments with
maturities greater than 1 year
Term loan - ANSWER-A contract under which a borrower
agrees to make a series of interest and principal payments
on specific dates to the lender
