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Devry FIN 382 Week 5 Quiz

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Devry FIN 382 Week 5 Quiz

Question 1.(TCO 6) Book value is of limited use to the investment analyst because it is based on

  • book numbers.
  • actual numbers.
  • historical numbers.
  • forecasted numbers.

Question 2.(TCO 4) Some employees prefer restricted stock over options because they receive

  • actual shares of stock.
  • preferred stock only.
  • a higher stock value.
  • All of the above

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Question 3. (TCO 6) What is the effect of the exercise of stock options?

  • They generate cash to the issuing firm, thereby increasing profit per share.
  • They are an expense at the time of exercise. This lowers net income.
  • They increase debt and lower borrowing capacity but have no effect on profit.
  • They increase the numbers of shares outstanding.

Question 4. (TCO 6) Which of the following could cause return on assets to decline when net profit margin is increasing?

  • Sale of investments at year-end
  • Purchase of a new building at year-end
  • Decline in book value
  • Increased turnover of operating assets
  • A stock split

Question 5 (TCO 5) Which of the following best indicates that a firm carries excess inventory?

  • A decline in sales
  • A decline in the current ratio
  • Stable current ratio with declining quick ratios
  • A rise in total asset turnover