Accounting

MC A firm has sales of $3,400, net income of $3...

A firm has sales of $3,400, net income of $390, total assets of $4,500, and total equity of $2,750. Interest expense is $40. What is the common-size statement value of the interest expense?

1.18 percent |

| 0.89 percent |

| 3.69 percent |

| 10.26 percent |

| 14.55 percent |

SDJ, Inc., has net working capital of $1,470, current liabilities of $4,730, and inventory of $1,965. |

Required: |

(a) | What is the current ratio? |

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(b) | What is the quick ratio? |

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Which of the following represent problems encountered when comparing the financial statements of two separate entities?

I. Either one, or both, of the firms may be conglomerates and thus have unrelated lines of business.

II. The operations of the two firms may vary geographically.

III. The firms may use differing accounting methods.

IV. The two firms may be seasonal in nature and have different fiscal year ends.

| I and II only |

| I, II, III, and IV |

| I, III, and IV only |

| I, II, and III only |

| II and III only |

Tobin's Q relates the market value of a firm's assets to which one of the following?

| average asset value of similar firms |

| average market value of similar firms |

| initial cost of creating the firm |

| current book value of the firm |

| today's cost to duplicate those assets |

Which one of the following statements is correct?

| Potential lenders place little value on financial statement information. |

| Book values should always be given precedence over market values. |

| Historical information provides no value to someone who is predicting future performance. |

| Financial statements are frequently used as the basis for performance evaluations. |

| Reviewing financial information over time has very limited value. |

Which one of the following will decrease if a firm can decrease its operating costs, all else constant?

| equity multiplier |

| return on...