Question :
31) Which type of ratio measures how effectively the firm : 1907274
31) Which type of ratio measures how effectively the firm uses its resources to generate income?
A) Activity
B) Liquidity
C) Profitability
D) Leverage
E) Market
32) When would the "return on equity" equal the "return on assets"?
A) Whenever the debt to equity ratio is one
B) Whenever the debt ratio is zero
C) Whenever a firm has positive net worth
D) Whenever the firm has positive net worth and positive net income
33) Your banker is concerned about your company's liquidity. Which of the following actions would increase the firm's current ratio and ease the bank's concern?
A) Sell some inventory for cash.
B) File for bankruptcy.
C) Call your convertible bonds and thereby force the bond holders to become shareholders.
D) Sell some of the firm's long-term bonds and purchase marketable securities.
E) Sell long-term bonds to purchase new machinery.
Blockbuster Inc.
Balance Sheet for year-ended Dec 31 ($000's)
|
ASSETS |
Year 1 |
Year 2 |
|
Cash |
194,200 |
200,200 |
|
Accounts Receivables |
185,800 |
150,000 |
|
Inventory |
242,200 |
202,900 |
|
Other Current Assets |
177,300 |
163,300 |
|
Total Current Assets |
799,500 |
716,400 |
|
Fixed Assets |
|
|
|
Long Term Investments |
214,100 |
159,500 |
|
PP&E |
1,079,400 |
909,000 |
|
Goodwill |
6,455,900 |
5,967,500 |
|
Total Fixed Assets |
7,749,400 |
7,036,000 |
|
Total Assets |
8,548,900 |
7,752,400 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Accounts Payable |
1,090,400 |
1,087,400 |
|
Short-term Debt |
32,800 |
181,400 |
|
Total Current Liabilities |
1,123,200 |
1,268,800 |
|
Long-term Debt |
1,417,300 |
734,900 |
|
Total Liabilities |
2,540,500 |
2,003,700 |
|
Shareholders' Equity |
|
|
|
Common Stock |
6,095,200 |
6,075,800 |
|
Retained Earnings |
-86,800 |
-327,100 |
|
Total Stockholder Equity |
6,008,400 |
5,748,700 |
|
Total Liabilities and Shareholders' Equity |
8,548,900 |
7,752,400 |
34) Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
|
|
Year 1 |
Year 2 |
|
Sales |
4,969,100 |
5,157,600 |
|
COGS |
2,036,000 |
2,420,700 |
|
SG&A |
2,390,600 |
2,532,400 |
|
Depreciation |
279,000 |
246,600 |
|
Amortization of Intangibles |
180,100 |
176,100 |
|
Operating Income (Loss) |
83,400 |
-218,200 |
|
Interest Expense |
116,500 |
78,200 |
|
Income Before Tax |
-33,100 |
-296,400 |
|
Income Tax Expense |
45,400 |
-56,100 |
|
Net Income |
-78,500 |
-240,300 |
Referring to the Blockbuster financial statements, what is the change in ROE from Year 1 to Year 2? (ΔROE = 
- 
)
A) -4.80%
B) -4.18%
C) -2.87%
D) -1.20%
E) -1.17%
35) Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
|
|
Year 1 |
Year 2 |
|
Sales |
4,969,100 |
5,157,600 |
|
COGS |
2,036,000 |
2,420,700 |
|
SG&A |
2,390,600 |
2,532,400 |
|
Depreciation |
279,000 |
246,600 |
|
Amortization of Intangibles |
180,100 |
176,100 |
|
Operating Income (Loss) |
83,400 |
-218,200 |
|
Interest Expense |
116,500 |
78,200 |
|
Income Before Tax |
-33,100 |
-296,400 |
|
Income Tax Expense |
45,400 |
-56,100 |
|
Net Income |
-78,500 |
-240,300 |
Referring to the Blockbuster financial statements, what is the change in ROA from Year 1 to Year 2? 
A) -8.40%
B) -7.54%
C) -2.18%
D) 8.40%
E) 23.72%
36) Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
|
|
Year 1 |
Year 2 |
|
Sales |
4,969,100 |
5,157,600 |
|
COGS |
2,036,000 |
2,420,700 |
|
SG&A |
2,390,600 |
2,532,400 |
|
Depreciation |
279,000 |
246,600 |
|
Amortization of Intangibles |
180,100 |
176,100 |
|
Operating Income (Loss) |
83,400 |
-218,200 |
|
Interest Expense |
116,500 |
78,200 |
|
Income Before Tax |
-33,100 |
-296,400 |
|
Income Tax Expense |
45,400 |
-56,100 |
|
Net Income |
-78,500 |
-240,300 |
Referring to the Blockbuster financial statements, which of the following ratios decreased from Year 1 to Year 2:
I.Equity Multiplier
II.Net Profit Margin
III.Total Asset Turnover
A) I
B) II
C) III
D) I & II
E) II & III
37) Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
|
|
Year 1 |
Year 2 |
|
Sales |
4,969,100 |
5,157,600 |
|
COGS |
2,036,000 |
2,420,700 |
|
SG&A |
2,390,600 |
2,532,400 |
|
Depreciation |
279,000 |
246,600 |
|
Amortization of Intangibles |
180,100 |
176,100 |
|
Operating Income (Loss) |
83,400 |
-218,200 |
|
Interest Expense |
116,500 |
78,200 |
|
Income Before Tax |
-33,100 |
-296,400 |
|
Income Tax Expense |
45,400 |
-56,100 |
|
Net Income |
-78,500 |
-240,300 |
Referring to the Blockbuster financial statements, what is the change in Gross Margin from Year 1 to Year 2? (ΔGM = 
- 
)
A) -7.54%
B) -5.96%
C) -2.28%
D) 5.96%
E) 7.54%
38) Blockbuster Inc.
Income Statement for year-ended Dec 31 ($000's)
|
|
Year 1 |
Year 2 |
|
Sales |
4,969,100 |
5,157,600 |
|
COGS |
2,036,000 |
2,420,700 |
|
SG&A |
2,390,600 |
2,532,400 |
|
Depreciation |
279,000 |
246,600 |
|
Amortization of Intangibles |
180,100 |
176,100 |
|
Operating Income (Loss) |
83,400 |
-218,200 |
|
Interest Expense |
116,500 |
78,200 |
|
Income Before Tax |
-33,100 |
-296,400 |
|
Income Tax Expense |
45,400 |
-56,100 |
|
Net Income |
-78,500 |
-240,300 |
Referring to the Blockbuster financial statements, what is the most important underlying reason for the change in ROE?
A) Decrease in cost of goods sold
B) Increase in debt caused the debt/equity ratio to rise
C) Increase in sales resulted in an increase in product returns which caused inventory turnover to decline
D) Increase in cost of goods sold caused a big drop in gross margin
E) Decrease in debt
Balance Sheet
Molson Coors Inc.
Years 1 & 2 ($000's)
|
|
Year 1 |
Year 2 |
|
Cash & Marketable Securities |
309,705 |
59,167 |
|
Accounts Receivable |
108,732 |
705,426 |
|
Inventories |
138,577 |
215,159 |
|
Other Current Assets |
49,515 |
74,144 |
|
Total Current Assets |
606,529 |
1,053,896 |
|
PP&E, Net |
869,710 |
1,380,239 |
|
Intangibles |
86,289 |
1,256,145 |
|
Other Assets |
177,164 |
607,131 |
|
Total Assets |
1,739,692 |
4,297,411 |
|
Accounts Payable |
222,493 |
334,647 |
|
Other current liabilities |
210,052 |
669,195 |
|
Short-term Debt |
85,000 |
144,049 |
|
Total Current Liabilities |
517,545 |
1,147,891 |
|
Long-term debt |
20,000 |
1,383,392 |
|
Other long-term liabilities |
250,835 |
784,277 |
|
Total liabilities |
788,380 |
3,315,560 |
|
Capital Stock |
8,922 |
28,334 |
|
Retained earnings |
954,981 |
1,086,965 |
|
Adjustments |
-12,591 |
-133,448 |
|
Total shareholders' equity |
951,312 |
981,851 |
|
Total Liabilities & Equity |
1,739,692 |
4,297,411 |
39) Income Statement
Molson Coors Inc.
Years 1 & 2 ($000s)
|
|
Year 1 |
Year 2 |
|
Revenues |
2,429,462 |
3,776,322 |
|
COGS |
1,537,623 |
2,414,530 |
|
Depreciation |
121,091 |
230,299 |
|
SG&A |
619,143 |
833,208 |
|
EBIT |
151,605 |
298,285 |
|
Interest Expense |
-14,403 |
49,732 |
|
Other income |
32,005 |
8,047 |
|
Pre-Tax Income |
198,013 |
256,600 |
|
Income Tax |
75,049 |
94,947 |
|
Net Income |
122,964 |
161,653 |
|
Shares outstanding |
36,902 |
36,140 |
|
Earnings per share |
$3.33 |
$4.47 |
|
Dividends per common share |
$0.80 |
$0.82 |
Referring to the Molson Coors financial statements, did ROE rise or fall from Year 1 to Year 2?
A) Rise
B) Fall
40) Income Statement
Molson Coors Inc.
Years 1 & 2 ($000s)
|
|
Year 1 |
Year 2 |
|
Revenues |
2,429,462 |
3,776,322 |
|
COGS |
1,537,623 |
2,414,530 |
|
Depreciation |
121,091 |
230,299 |
|
SG&A |
619,143 |
833,208 |
|
EBIT |
151,605 |
298,285 |
|
Interest Expense |
-14,403 |
49,732 |
|
Other income |
32,005 |
8,047 |
|
Pre-Tax Income |
198,013 |
256,600 |
|
Income Tax |
75,049 |
94,947 |
|
Net Income |
122,964 |
161,653 |
|
Shares outstanding |
36,902 |
36,140 |
|
Earnings per share |
$3.33 |
$4.47 |
|
Dividends per common share |
$0.80 |
$0.82 |
Referring to the Molson Coors financial statements, what is the change in ROA from Year 1 to Year 2? (ΔROA = 
- 
)
A) -3.3%
B) -2.3%
C) 2.3%
D) 3.5%
E) 3.8%
