Question :
51. _____ measures the amount of sales generated from a particular : 1230615
51. _____ measures the amount of sales generated from a particular level of investments in fixed assets.
A. Fixed asset ratio
B. Fixed asset turnover ratio
C. Asset ratio
D. Fixed asset ratio
E. Inventory turnover ratio
52. Which of the following could affect the fixed asset turnover ratio?
A. a firms often invests in fixed assets several periods before these assets generate sales from products manufactured in their plants or sold in their stores
B. a low or decreasing rate of fixed asset turnover may indicate an expanding firm preparing for future growth
C. a firm anticipating a decline in product sales could cut back its expenditures on fixed assets and increase the fixed asset turnover ratio
D. all of the above
E. none of the above
53. U.S. GAAP and IFRS define a(n) _____ segment as a unit within a firm for which management prepares separate financial information and which management regularly evaluates in allocating resources and assessing performance.
A. operating
B. investing
C. financing
D. economic
E. accountable
54. As a practical matter, most firms report segment information by _____ indicating that most firms appear to be organized on these same lines.
A. geographical markets
B. products and services
C. major customers
D. resource inputs
E. production methods
55. A firm computes ROA, profit margin for ROA, and total assets turnover for each segment using the segment disclosures. The amounts for these ratios computed at a segment level differ from those at a corporate level for which of the following reasons?
A. The numerator of ROA at a firm-wide level includes all revenues and expenses except interest expense net of taxes, whereas the numerator of ROA using the segment data includes operating revenues and expenses only.
B. The denominator of ROA at a firm-wide level is the average of assets at the beginning and end of the year, whereas total assets at the end of the year are used in computing segment ROAs.
C. The denominator of ROA at a firm-wide level is the total assets at the end of the year, whereas the average of assets at the beginning and end of the year, are used in computing segment ROAs.
D. choices a and b
E. choices a and c
56. The calculation of Rate of Return on Common Shareholders’ Equity (ROCE) is as follows:
Rate of Return on Common = Shareholders’ Equity
A. Net Income – Dividends on Preferred Stock
—————————————————
Ending Common Shareholders’ Equity
B. Net Income
—————————————————
Average Common Shareholders’ Equity
C. Net Income + Dividends on Preferred Stock
—————————————————
Average Common Shareholders’ Equity
D. Net Income – Dividends on Preferred Stock
—————————————————
Average Common Shareholders’ Equity
E. Net Income + Dividends on Preferred Stock
—————————————————
Ending Common Shareholders’ Equity
57. To calculate the amount of net income assignable to common shareholders’ equity, the analyst does not
A. subtract all amounts required to compensate other providers of financing for the use of their funds.
B. make any further adjustment for interest.
C. subtract from net income any earnings allocable to preferred stock equity usually the dividends on preferred stock declared during the period.
D. subtract dividends on common stock.
E. none of the above
58. The capital provided by common shareholders during the period includes
A. the average par value of common stock
B. capital contributed in excess of par value on common stock
C. retained earnings
D. other common shareholders’ equity accounts
E. all of the above
59. The capital provided by common shareholders during the period used for calculating the return on common equity equals
A. the average par value of common stock, capital contributed in excess of par value on common stock, retained earnings, and any other common shareholders’ equity accounts for the period.
B. average preferred shareholders’ equity less average total shareholders’ equity.
C. the ending par value of common stock, capital contributed in excess of par value on common stock, retained earnings, and any other common shareholders’ equity accounts for the period.
D. ending preferred shareholders’ equity less ending total shareholders’ equity.
E. choices a and b
60. ROCE will exceed ROA whenever ROA exceeds the after-tax cost of borrowing plus any dividends required for preferred shareholders. Which of the following is true?
A. The bond holders earn a higher return, but they undertook more risk in their investment
B. The preferred shareholders earn a lower return, but they undertook more risk than the common shareholders in their investment
C. The common shareholders earn a higher return, but they undertook more risk in their investment
D. Using lower-cost borrowed funds and then earning a rate of return on those funds higher than their cost increases the return to the common shareholders
E. Choices c and d
