Chapter03-FinancialStatementsAnalysisandLong-TermPlanning3-1Chapter03FinancialStatementsAnalysisandLong-TermPlanningAnswerKeyMultipleChoiceQuestions1.Onekeyreasonalong-termfinancialplanisdevelopedisbecause:A.theplandeterminesyourfinancialpolicy.B.theplandeterminesyourinvestmentpolicy.C.therearedirectconnectionsbetweenachievablecorporategrowthandthefinancialpolicy.D.thereisunlimitedgrowthpossibleinawell-developedfinancialplan.E.Noneoftheabove.Difficultylevel:EasyTopic:LONG-TERMPLANNINGType:DEFINITIONS2.Projectedfuturefinancialstatementsarecalled:A.plugstatements.B.proformastatements.C.reconciledstatements.D.aggregatedstatements.E.noneoftheabove.Difficultylevel:EasyTopic:PROFORMASTATEMENTSType:DEFINITIONSChapter03-FinancialStatementsAnalysisandLong-TermPlanning3-23.Thepercentageofsalesmethod:A.requiresthatallaccountsgrowatthesamerate.B.separatesaccountsthatvarywithsalesandthosethatdonotvarywithsales.C.allowstheanalysttocalculatehowmuchfinancingthefirmwillneedtosupportthepredictedsaleslevel.D.BothAandB.E.BothBandC.Difficultylevel:MediumTopic:PERCENTAGEOFSALESType:DEFINITIONS4.A_____standardizesitemsontheincomestatementandbalancesheetasapercentageoftotalsalesandtotalassets,respectively.A.taxreconciliationstatementB.statementofstandardizationC.statementofcashflowsD.common-baseyearstatementE.common-sizestatementDifficultylevel:EasyTopic:COMMON-SIZESTATEMENTSType:DEFINITIONS5.Relationshipsdeterminedfromafirm'sfinancialinformationandusedforcomparisonpurposesareknownas:A.financialratios.B.comparisonstatements.C.dimensionalanalysis.D.scenarioanalysis.E.solvencyanalysis.Difficultylevel:EasyTopic:FINANCIALRATIOSType:DEFINITIONSChapter03-FinancialStatementsAnalysisandLong-TermPlanning3-36.Financialratiosthatmeasureafirm'sabilitytopayitsbillsovertheshortrunwithoutunduestressareknownas_____ratios.A.assetmanagementB.long-termsolvencyC.short-termsolvencyD.profitabilityE.marketvalueDifficultylevel:EasyTopic:SHORT-TERMSOLVENCYRATIOSType:DEFINITIONS7.Thecurrentratioismeasuredas:A.currentassetsminuscurrentliabilities.B.currentassetsdividedbycurrentliabilities.C.currentliabilitiesminusinventory,dividedbycurrentassets.D.cashonhanddividedbycurrentliabilities.E.currentliabilitiesdividedbycurrentassets.Difficultylevel:EasyTopic:CURRENTRATIOType:DEFINITIONS8.Thequickratioismeasuredas:A.currentassetsdividedbycurrentliabilities.B.cashonhandpluscurrentliabilities,dividedbycurrentassets.C.currentliabilitiesdividedbycurrentassets,plusinventory.D.currentassetsminusinventory,dividedbycurrentliabilities.E.currentassetsminusinventoryminuscurrentliabilities.Difficultylevel:EasyTopic:QUICKRATIOType:DEFINITIONSChapter03-FinancialStatementsAnalysisandLong-TermPlanning3-49.Thecashratioismeasuredas:A.currentassetsdividedbycurrentliabilities.B.currentassetsminuscashonhand,dividedbycurrentliabilities.C.currentliabilitiespluscurrentassets,dividedbycashonhand.D.cashonhandplusinventory,dividedbycurrentliabilities.E.cashonhanddividedbycurrentliabilities.Difficultylevel:MediumTopic:CASHRATIOType:DEFINITIONS10.Ratiosthatmeasureafirm'sfinancialleverageareknownas_____ratios.A.assetmanagementB.long-termsolvencyC.short-termsolvencyD.profitabilityE.marketvalueDifficultylevel:EasyTopic:LONG-TERMSOLVENCYRATIOSType:DEFINITIONS11.Thefinancialratiomeasuredastotalassetsminustotalequity,dividedbytotalassets,isthe:A.totaldebtratio....
