BWFF2023 FINANCIAL MANAGEMENT (A152)

TUTORIAL 3: ASSESSING FIRMS FINANCIAL PERFORMANCE

Name:..

Metric No:..

1) A common-size income statement is an accounting statement that expresses all of a firm's

expenses as percentage of:
A. total assets.
B. total equity.
C. net income.
D. sales.
2) Which one of the following standardizes items on the income statement and balance sheet
relative to their values as of a common point in time?
A. statement of standardization
B. statement of cash flows
C. common-base year statement
D. common-size statement
3) Which of the following ratios are measures of a firm's liquidity?
I.
quick ratio
II.
interval measure
III.
debt-equity ratio
IV.
cash coverage ratio
A.
B.
C.
D.

I and II only
II and IV only
I, III, and IV only
I, II, and III only

4) Ratios that measure how efficiently a firm manages its assets and operations to generate net
income are referred to as _____ ratios.
A. asset management
B. long-term solvency
C. short-term solvency
D. profitability
5) The current ratio for Dana Ltd in 2013 was ________. (See data of Dana Ltd)
A) 1.58
B) 0.63
C) 1.10
D) 0.91
6) Since 2012, the liquidity of Dana Ltd ________. (See data of Dana Ltd)
A) has deteriorated
B) has remained the same
C) has improved

BWFF2023 FINANCIAL MANAGEMENT (A152)

TUTORIAL 3: ASSESSING FIRMS FINANCIAL PERFORMANCE
Name:..
D) is not determinable

Metric No:..

7) The net working capital for Dana Ltd in 2013 was ________. (See data of Dana Ltd)
A) $10,325
B) -$10,325
C) -$1,425
D) $14,250
8) The inventory turnover for Dana Ltd in 2013 was ________. (See data of Dana Ltd)
A) 43
B) 5
C) 20
D) 25
9) The inventory management at Dana Ltd ________ since 2012. (See data of Dana Ltd)
A) has deteriorated
B) has remained the same
C) has improved slightly
D) cannot be determined
10) The average collection period for Dana Ltd in 2013 was ________. (See data of Dana Ltd)
A) 32.5 days.
B) 11.8 days.
C) 25.3 days.
D) 35.9 days.
11) If Dana Ltd has credit terms which specify that accounts receivable should be paid in 25
days, the average collection period ________ since 2012. (See data of Dana Ltd)
A) has deteriorated
B) has remained the same
C) has improved
D) cannot be determined
12) Dana Ltd had a ________ degree of financial leverage than the industry standard, resulting in
________ in 2012. (See data of Dana Ltd)
A) lower; lower return on total assets
B) lower; lower return on equity
C) higher; higher return on equity
D) higher; higher return on total assets
13) The debt ratio for Dana Ltd in 2013 was ________. (See data of Dana Ltd)
A) 50 percent
B) 11 percent
C) 55 percent

BWFF2023 FINANCIAL MANAGEMENT (A152)

TUTORIAL 3: ASSESSING FIRMS FINANCIAL PERFORMANCE
Name:..
D) 44 percent

Metric No:..

14) Dana Ltd' gross profit margin was inferior to the industry standard. This may have resulted
from ________. (See data of Dana Ltd)
A) a high sales price
B) the high cost of goods sold
C) excessive selling and administrative expenses
D) excessive interest expense
15) The gross profit margin and net profit margin for Dana Ltd in 2013 were ________. (See
data of Dana Ltd)
A) 13 percent and 0.9 percent, respectively
B) 13 percent and 1.5 percent, respectively
C) 2 percent and 0.9 percent, respectively
D) 2 percent and 1.5 percent, respectively
16) The return on total assets for Dana Ltd for 2013 was ________. (See data of Dana Ltd)
A) 0.9 percent
B) 5.5 percent
C) 25 percent
D) 2.5 percent
17) The return on equity for Dana Ltd for 2013 was ________. (See data of Dana Ltd)
A) 0.6 percent
B) 5.6 percent
C) 0.9 percent
D) 50 percent
18) Using the modified DuPont formula allows the analyst to break Dana Ltd return on equity
into 3 components: the net profit margin, the total asset turnover, and a measure of leverage (the
financial leverage multiplier). Which of the following mathematical expressions represents the
modified DuPont formula relative to Dana Ltd' 2013 performance? (See Data of data Ltd)
A) 5.6(ROE) = 2.5(ROA) 2.22(Financial leverage multiplier)
B) 5.6(ROE) = 3.3(ROA) 1.70(Financial leverage multiplier)
C) 4.0(ROE) = 2.5(ROA) 2.00(Financial leverage multiplier)
D) 2.5(ROE) = 5.6(ROA) 2.22(Financial leverage multiplier)

BWFF2023 FINANCIAL MANAGEMENT (A152)

TUTORIAL 3: ASSESSING FIRMS FINANCIAL PERFORMANCE
Name:..

Metric No:..
Dana Ltd
Key Ratios

Income Statement (For the Year Ended December 31, 2013)

Balance Sheet (December 31, 2013)