Esame week 2
Financial Ratios Mastery Quiz
Test your knowledge of financial ratios and their applications in the venture lifecycle. This quiz covers key concepts in understanding financial data, analyzing performance, and making informed decisions. Whether you are a student, an entrepreneur, or a finance enthusiast, this quiz will challenge your understanding and help reinforce your learning.
- Explore different financial ratios
- Assess venture performance stages
- Understand investment banking insights
Showing the relationships between two or more financial variable and/or time, financial ratios are useful means of summarizing large amounts of financial data for comparative purposes.
True
False
Second-round, mezzanine, and liquidity-stage financing generally occur during a venture’s survival stage.
True
False
Investment bankers are users of financial ratios and measures of ventures primarily during the rapid-growth stage relative to the development and startup stages
True
False
Cross-sectional analysis is used to examine a venture’s performance over time.
True
False
Leverage ratios indicate the extent to which the venture has used debt and its ability to meet debt obligation
True
False
The equity multiplier is considered an efficiency ratio.
True
False
Profitability and efficiency ratios are generally considered to be more important during the development and startup stages compared to the survival and rapid-growth stages.
True
False
The part of a venture’s interest payment that is subsidized by the government because of the deductibility of interest is called the interest tax shield.
True
False
How efficiently a venture controls its expenses and uses its assets and debt is evaluated with profitability and efficiency ratios.
True
False
The Return on Assets model states: ROA = net profit margin × asset turnover × the equity multiplier.
True
False
If a firm has positive net income, a drop in a venture’s asset intensity ratio will increase its ROE
True
False
Investment bankers and commercial banks are important users of financial ratios and measures during which of the following life cycle stages?
Development stage
Startup stage
Survival stage
Rapid-growth stage
All four stages
The entrepreneur, angels, and VCs are important users of financial ratios and measures during which of the following life cycle stages?
Development stage
Startup stage
Survival stage
Rapid-growth stage
All four stages
Which of the following is used to examine a venture’s performance over time?
Qualitative analysis
Trend analysis
Cross sectional analysis
Industry comparable analysis
Which of the following is used to compare a venture’s performance against another firm at the same point in time?
Qualitative analysis
Trend analysis
Cross sectional analysis
Industry comparable analysis
Net sales minus cost of goods sold when divided by sales is called which of the following ratios?
Gross profit margin
Operating profit margin
Net profit margin
Net operating profit after taxes margin
Net income divided by net sales is called which of the following ratios?
Net operating profit after taxes margin
Net profit margin
Operating profit margin
Gross profit margin
The difference between a venture’s ability to generate cash to pay interest and the amount of interest it has to pay is determined by which of the following ratios?
Fixed charges coverage
Debt to asset
Equity multiplier
Debt to equity
Interest coverage
Which of the following is not a profitability and efficiency ratio?
Sales-to-total-assets
Return on equity
Return on assets
Inventory-to-total assets
NOPAT profit margin
Which of the following is true?
ROA is always greater than or equal to ROE
An increase in the asset turnover ratio implies a decrease in the asset intensity ratio
A and b
None of the above
A firm has the following balance sheet information: total assets = $100,000; current assets = $30,000; inventories = $10,000; cash = $5,000; total liabilities = $30,000; current liabilities = $15,000; notes payable = $2,000. What are the firm’s quick and NWC-to-Total-Assets ratios?
1.00 and .13
1.33 and .13
1.00 and .15
1.33 and .15
Last year, Nemo’s Fish ‘n Chips recorded the following financial data: sales = $85,000; cost of goods sold = $45,000; selling and administrative expenses = $25,000; depreciation and amortization = $7,000; interest expense = $12,000. The tax rate was 30%. Find Nemo’s interest coverage for last year.
-.29 times
.66 times
.86 times
1.25 times
3.33 times
A venture has net sales of $400,000, cost of goods sold of $200,000, operating expenses (selling, general, and administrative) of $100,000, and interest expenses of $50,000. What is the operating profit margin?
50.0%
75%
25%
40%
Last year, Lenny’s Lemonade had $3,500 in sales, and cost of goods sold was $2,000. Depreciation expenses totalled $500 and interest expense was $700. If the tax rate is 25%, what is the net profit margin for Lenny’s Lemonade? What is its NOPAT margin?
6.43% and 21.43%
20.7% and 21.43%
2.14% and 32.14%
22.86% and 32.14%
Best practices of high-growth, high-performance firms applied in the marketing practices area include “developing new products or services that are considered to be the best.”
True
False
Best practices of high-growth, high-performance firms applied in the marketing practices area include “preparing detailed monthly financial plans for the next year and annual financial plans for the next five years.
True
False
Best practices of high-growth, high-performance firms applied in the financial practices area include “preparing detailed monthly financial plans for the next year and annual financial plans for the next five years.
True
False
Best practices of high-growth, high-performance firms applied in the management practices area include “assembling a management team that is balanced in both functional area coverage and industry/market knowledge.
True
False
Nonfinancial performance output measures are used to improve the input measures.
True
False
An example of a nonfinancial measure is the number of customer complaints.
True
False
A company should only use nonfinancial performance measures when financial measures cannot be calculated.
True
False
The balanced scorecard is a set of financial and nonfinancial measures that reflect the performance of the business.
True
False
Non-financial accounting information is used more often for long-term operating decisions than is financial information.
True
False
A non-financial measure is operating information that has not been translated into dollars.
True
False
Costs of controlling quality include prevention costs and internal failure costs.
True
False
Prevention costs and appraisal costs are considered costs of controlling quality.
True
False
Costs of failing to control quality include prevention costs and external failure costs.
True
False
It is easier to quantify costs of controlling quality than the costs of failing to control quality.
True
False
By spending more in costs of controlling quality, the costs of failing to control quality will decrease.
True
False
Developing new and delivering high-quality products or services that command higher prices and margins best describes strong
Marketing practices
Financial practices
Operating practices
Management practices
Effective entrepreneurial management teams should include all of the following except?
Provide expertise in the areas of marketing, finance, and operations
Have successful experience in the venture’s industry and markets
Work collaboratively with each other
Share the entrepreneurial spirit
In-house accounting, auditing, and tax professionals
The balanced scorecard measures financial and non-financial performance of a business. The balanced scorecard measures four areas. Identify one of the following that is not included as a performance measurement.
Internal Process
Financial
Innovation and Learning
Employees
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