投资学第7版Test Bank答案19Word格式.docx

投资学第7版Test Bank答案19Word格式.docx

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A）Thebalancesheetprovides

B）Theincomestatementprovides

C）Thestatementofcashflowsprovides

D）Alloftheaboveprovide

E）Noneoftheaboveprovides

ADifficulty:

Thebalancesheetisstatementofassets,liabilities,andequityatonepointintime.

4.__________ofthecashflowgeneratedbythefirm'

soperations,investmentsandfinancialactivities.

A）Thebalancesheetisareport

B）Theincomestatementisareport

C）Thestatementofcashflowsisareport

D）theauditor'

sstatementoffinancialcondition

E）Noneoftheaboveisareport

CDifficulty:

OnlystatementCiscorrect;

thebalancesheetreportsassets,liabilities,andequityatapointintime;

theincomestatementisasummaryofearningsoveraperiodoftime.

5.Afirmhasahigherassetturnoverratiothantheindustryaverage,whichimplies

B）thefirmismorelikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry.

C）thefirmismoreprofitablethanotherfirmsintheindustry.

D）thefirmisutilizingassetsmoreefficientlythanotherfirmsintheindustry.

E）thefirmhashigherspendingonnewfixedassetsthanotherfirmsintheindustry.

DDifficulty:

Thehighertheassetturnoverratiothemoreefficientlythefirmisusingassets.

6.Ifyouwishtocomputeeconomicearningsandaretryingtodecidehowtoaccountforinventory,_______.

A）FIFOisbetterthanLIFO

B）LIFOisbetterthanFIFO

C）FIFOandLIFOareequallygood

D）FIFOandLIFOareequallybad

E）noneoftheabove

BDifficulty:

LIFOreflectsthecurrentcostofgoodssold,andthusisabetterdeterminantofeconomicearnings.

7.__________oftheprofitabilityofthefirmoveraperiodoftimesuchasayear.

A）Thebalancesheetisasummary

B）Theincomestatementisasummary

C）Thatstatementofcashflowsisasummary

D）Theauditreportisasummary

E）Noneoftheaboveisasummary

Theincomestatementsummarizesrevenuesandexpensesoveraperiodoftime.

8.GiventheresultsofthestudybyClayman,youwould__________thestocksoffirmswithhighROEsand__________thestocksoffirmswithlowROEs.

A）wanttobuy,wanttobuy

B）wanttobuy,notwanttobuy

C）notwanttobuy,wanttobuy

D）notwanttobuy,notwanttobuy

E）beunabletobuy,wanttobuy

Moderate

ClaymanfoundthatinvestinginfirmswithhighROEsproducedresultsinferiortothoseobtainedbyinvestinginstockswithlowerROEs.

9.Overaperiodofthirty-oddyearsinmanaginginvestmentfunds,BenjaminGrahamusedtheapproachofinvestinginthestocksofcompanieswherethestocksweretradingatlessthantheirworkingcapitalvalue.Theaveragereturnfromusingthisstrategywasapproximately______.

A）5%

B）10%

C）15%

D）20%

AlthoughGrahamsaidin1976thatmarketsweresoefficientthatonecouldnotexpecttoidentifyundervaluedsecuritiesconsistentlyashehaddonethroughouthiscareer,hecontinuedtofindthisonevariableuseful.

10.AstudybySpeidellandBavishi（1992）foundthatwhenaccountingstatementsofforeignfirmswererestatedonacommonaccountingbasis,

A）theoriginalandrestatedP/Eratioswerequitesimilar.

B）theoriginalandrestatedP/Eratiosvariedconsiderably.

C）mostvariationwasexplainedbytaxdifferences.

D）mostfirmswereconsistentintheirtreatmentofgoodwill.

E）noneoftheabove.

ThisstudyfoundthatrestatedP/Eratiosvariedconsiderablyfromthoseoriginallyreported.

11.IftheinterestrateondebtishigherthanROA,thenafirmwill__________byincreasingtheuseofdebtinthecapitalstructure.

A）increasetheROE

B）notchangetheROE

C）decreasetheROE

D）changetheROEinanindeterminablemanner

IfROAislessthantheinterestrate,thenROEwilldeclinebyanamountthatdependsonthedebttoequityratio.

12.AfirmhasamarkettobookvalueratiothatisequivalenttotheindustryaverageandanROEthatislessthantheindustryaverage,whichimplies_______.

A）thefirmhasahigherP/Eratiothanotherfirmsintheindustry

B）thefirmismorelikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry

C）thefirmismoreprofitablethanotherfirmsintheindustry

D）thefirmisutilizingitsassetsmoreefficientlythanotherfirmsintheindustry

TherelationshipP/E=（P/B）/ROEindicatesthatAispossible.

13.Inperiodsofinflation,accountingdepreciationis__________relativetoreplacementcostandrealeconomicincomeis________.

A）overstated,overstated

B）overstated,understated

C）understated,overstated

D）understated,understated

E）correctly,correctly

Fixedassetsaredepreciatedbasedonhistoricalcostsand,asaresult,areunderstatedrelativetoreplacementcostsduringperiodsofinflation;

asaresult,realeconomicincomeisoverstated.

14.Ifafirmhasapositivetaxrate,apositiveROA,andtheinterestrateondebtisthesameasROA,thenROAwillbe________.

A）greaterthantheROE

B）equaltotheROE

C）lessthantheROE

D）greaterthanzerobutitisimpossibletodeterminehowROAwillcomparetoROE

E）negativeinallcases

Ifinterestrate=ROA;

ROE=（1-taxrate）ROA;

ROA>

ROE.

15.AfirmhasaP/Eratioof12andaROEof13%andamarkettobookvalueof__________.

A）0.64

B）0.92

C）1.08

D）1.56

E/P=ROE/（P/B）;

1/12=0.13）P/B;

0.0833=0.13/（P/B）;

0.0833（P/B）=0.13;

P/B=1.56.

Usethefollowingtoanswerquestions16-26:

ThefinancialstatementsofFineFursCompanyaregivenbelow.

FineFursCompany

IncomeStatement（2005）

Sales

$4,000,000

Costofgoodssold

3,040,000

Grossprofit

960,000

Sellingandadministrativeexpenses

430,000

Operatingprofit

530,000

Interestexpense

160,000

Incomebeforetax

370,000

Taxexpense

148,000

Netincome

$222,000

BalanceSheet

2005

2004

Cash

$60,000

$50,000

Accountsreceivable

550,000

500,000

Inventory

690,000

620,000

Totalcurrentassets

1,300,000

1,170,000

Fixedassets

1,230,000

Totalassets

2,600,000

2,400,000

Accountspayable

270,000

250,000

Bankloan

580,000

Totalcurrentliabilities

850,000

750,000

Bondspayable

900,000

1,000,000

Totalliabilities

1,750,000

Commonstock（25,000shares）

Retainedearnings

600,000

400,000

Totalliabilities&

equity

$2,600,000

$2,400,000

Note:

Thecommonsharesaretradinginthestockmarketfor$100each.

16.RefertothefinancialstatementsforFineFursCompany.Thefirm'

scurrentratiofor2005is___________.

A）1.98

B）2.47

C）0.65

D）1.53

$1,300,000/$850,000=1.53.

17.RefertothefinancialstatementsofFineFursCompany.Thefirm'

squickratiofor2005is_______.

A）1.68

B）1.12

C）0.72

D）1.92

（$1,300,000-$690,000）/$850,000=0.72.

18.RefertothefinancialstatementsofFineFursCompany.Thefirm'

sleverageratiofor2005is_________.

A）2.25

B）3.53

C）2.61

D）3.06

$2,600,000/$850,000=3.06.

19.RefertothefinancialstatementsofFineFursCompany.Thefirm'

stimesinterestearnedratiofor2005is__________.

A）2.26

B）3.16

C）3.84

D）3.31

$530,000/$160,000=3.31.

20.RefertothefinancialstatementsofFineFursCompany.Thefirm'

saveragecollectionperiodfor2005is_______days.

A）47.90

B）48.53

C）46.06

D）47.65

（525,000/4,000,000）（365）=47.90.

21.RefertothefinancialstatementsofFineFursCompany.Thefirm'

sinventoryturnoverratiofor2005is________.

A）4.64

B）4.16

C）4.41

D）4.87

ADiff