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# FIN 571 Week 2 Quiz

FIN 571 Week 2 Quiz -

Multiple Choice Question 53

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

• It allows management to examine each ratio over time and determine whether the trend is good or bad for the firm.
• This benchmark is based on a firm's historical performance.
• The Standard Industrial Classification (SIC) System is used to identify benchmark firms.
• All of these are true statements.

Multiple Choice Question 68

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?

• None of these
• 14.15 times
• 15.42 times
• 18.34 times

Multiple Choice Question 68

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.

• \$1,715 million
• \$1,651 million
• \$1,421 million
• \$1,191 million

Multiple Choice Question 46

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.
• a firm's creditors to assess how well the firm will meet its short-term liabilities other than interest expense.
• a firm's management to assess how well they meet short-term liabilities.
• a firm's shareholders to assess how well the firm will meet its short-term liabilities.

Multiple Choice Question 54

Peer group analysis can be performed by

• management choosing a set of firms that are similar in size or sales, or who compete in the same market.
• using the average ratios of this peer group, which would then be used as the benchmark.
• identifying firms in the same industry that are grouped by size, sales, and product lines, in order to establish benchmark ratios.
• Only a and b relate to peer group analysis.

Multiple Choice Question 61

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?

• \$13,403,567
• \$881,234
• \$1,340,357
• \$81,234