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fin 571 week 2 quiz (100% score).docx

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1. Which one of the following statements about trend analysis is NOT correct?

2. Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800.

Its depreciation for the year is $1,434,500. What is its cash coverage ratio?

3. Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of

$121 million in the last fiscal year. In attempting to determine the total value of the firm, an

investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million

shares outstanding, a share price of $14.25, and net income of $182 million. What is the

total value of Turner Corp.? Round to the nearest million dollars

4. Coverage ratios, like times interest earned and cash coverage ratio, allow

5. Peer group analysis can be performed by

6. Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales

of $3,436,812, what is its level of receivables?

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1 Which one of the following statements about trend analysis is NOT correct?

The Standard Industrial Classification (SIC) System is used to identify benchmark firms.

2 Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800.

Its depreciation for the year is $1,434,500. What is its cash coverage ratio?

14.15 times

3 Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of

$121 million in the last fiscal year. In attempting to determine the total value of the firm, an

investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million

shares outstanding, a share price of $14.25, and net income of $182 million. What is the

total value of Turner Corp.? Round to the nearest million dollars

1650.54 million or 1651 million

4 Coverage ratios, like times interest earned and cash coverage ratio, allow

a firm’s creditors to assess how well the firm will meet its interest obligations.

5 Peer group analysis can be performed by

a) management choosing a set of firms that are similar in size or sales, or who compete in the

same market.

b) using the average ratios of this peer group, which would then be used as the

benchmark.

c) identifying firms in the same industry that are grouped by size, sales, and product

lines, in order to establish benchmark ratios.

d) Only a and b relate to peer group analysis.

6 Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales

of $3,436,812, what is its level of receivables?

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1. Which one of the following statements about trend analysis is NOT correct? 2. Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio? 3. Multiples analysis: Turner Corp. has debt of $230 million and generated a net income of $121 million in the last fiscal year. In attempting to determine the total value of the firm, an investor identified a similar firm in Jacobs, Inc., an all-equity firm. This firm had 150 million shares outstanding, a share price of $14.25, and net income of $182 million. What is the total value of Turner Corp.? Round to the nearest million dollars 4. Coverage ratios, like times interest earned and cash coverage ratio, allow 5. Peer group analysis can be performed by 6. Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 ti ...
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