VSB 2004 Final Exam 2 Questions & Answers 2024/2025
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Course
VSB 2004
Institution
VSB 2004
VSB 2004 Final Exam 2 Questions & Answers 2024/2025
direct method: operating cash flows - ANSWERSuse t-accounts to convert operating income to operating cash flows
direct method: investing cash flows - ANSWERSpaid for long-lived assets (land, buildings, equipment)
cash received from the sa...
VSB 2004 Final Exam 2 Questions &
Answers 2024/2025
direct method: operating cash flows - ANSWERSuse t-accounts to convert operating income to operating
cash flows
direct method: investing cash flows - ANSWERSpaid for long-lived assets (land, buildings, equipment)
cash received from the sale of long-lived assets
cash paid for LT investments
cash received from sale of LT investments
direct method: financing cash flows - ANSWERScash received from institutional borrowing
principal repaid on institutional borrowing
cash received from stock issuance
cash paid for dividends
cash inflows and outflows from treasury stock purchases and sales
financial ratios - ANSWERSshows the relationship between different pieces of financial information
can simplify both comparisons across time (trend analysis) and within industry
ratio analysis - ANSWERSuseful to stakeholders
multiple possible interpretations of most ratios
often see different variations of the same ratio
profitability ratios - ANSWERSoverall performance - return on equity (ROE), return on assets (ROA)
margins - gross margin %, return on sales (ROS)
asset efficiency - asset turnover
, leverage ratios - ANSWERSdoes the firm rely to much or too little on debt?
Debt to equity
equity multiplier
measure extent to which a company relies on debt
leverage = the ability to make extra profit w/o adding equity
liquidity ratios - ANSWERSdoes the firm have sufficient assets to satisfy short-term obligations?
current ratio
quick ratio
working capital ratio - ANSWERSdoes the firm efficiently manage its short-term operating cash flows?
avg. days in A/R
avg. days in inventory
avg. days in A/P
cash conversion cycle
other financial ratios - ANSWERSdividend payout
EPS
market to book
return on equity (ROE) - ANSWERS= net income / avg. shareholder's equity
measure the return to shareholders based on the capital they invested
2 ways owners can invest in firms - ANSWERS(1) sell stock - contributed capital
(2) profitable activities - retained earnings
high ROE - ANSWERSsuggests that the firm is making good investments and growing the wealth of
shareholders
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