Question

kindly give me the true-false answer, please. if you are not sure please don't take this

Question 1 (TRUE or FALSE?) Current assets normally include fixed assets such as buildings, land, and machinery.

Question 2 (TRUE or FALSE?) ROE = Gross income/Preferred equity.

Question 3 (TRUE or FALSE?) The times-interest-earned (TIE) uses net income rather than EBIT because dividends is paid with pre-tax dollars and therefore the firm’s ability to pay current dividends is not affected by taxes.

Question 4 (TRUE or FALSE?) The ratio of gross income to common equity measures the return on total assets (ROE).

Question 5 (TRUE or FALSE?) Inventories may result in losses in a bankruptcy because inventories are the least liquid of a firm’s current assets.

Question 6 (TRUE or FALSE?) The return on total assets is the ratio of gross income to total debt.

Question 7 (TRUE or FALSE?) If the firm’s assets generate a higher pre-tax return than the interest rate on debt, then the shareholders’ returns are magnified, or “leveraged.”

Question 8 (TRUE or FALSE?) The net profit margin identifies the gross profit per dollar of sales before any other expenses are deducted.

Question 9 (TRUE or FALSE?) If the ROIC is greater than the company’s weighted average cost of capital (WACC), then the company usually is adding value.

Question 10 (TRUE or FALSE?) The net profit margin is calculated by dividing sales by taxable income.

Question 11 (TRUE or FALSE?) Market debt ratio = Total debt/(Total debt + Market value of equity).

Question 12 (TRUE or FALSE?) The current ratio measures liquidity by comparing the current assets to the current liabilities and it is equal to current assets divided by current liabilities.

Question 13 (TRUE or FALSE?) If a company has high leverage, even a small decline in performance might cause the firm’s value to fall below the amount it owes to creditors.

Question 14 (TRUE or FALSE?) Window dressing is a technique employed by firms to make their financial statements look worse than they really are.

Question 15 (TRUE or FALSE?) The extent to which a firm uses debt financing is called financial leverage.

Question 16 (TRUE or FALSE?) Net operating working capital is operating current liabilities minus operating current assets.

Question 17 (TRUE or FALSE?) The income statement begins with assets, which are the “things” the company owns.

Question 18 (TRUE or FALSE?) Taxable income is defined as gross income less a set of exemptions and deductions which are spelled out in the instructions to the tax forms individuals must file.

Question 19 (TRUE or FALSE?) Assets such as stocks, bonds, and real estate are defined as capital assets and if a capital asset is sold for more than its cost, the profit is called a capital gain.

Question 20 (TRUE or FALSE?) Preferred stock is a hybrid or a cross between common stock and debt.

Question 21 (TRUE or FALSE?) Investing activities such as sells a building increases cash at the time of the sale.

Question 22 (TRUE or FALSE?) A progressive tax means the higher one’s income, the smaller the percentage paid in taxes.

Question 23 (TRUE or FALSE?) An S corporation is a small corporation which, under Subchapter S of the Internal Revenue Code, elects to be taxed as a proprietorship or a partnership yet retains limited liability and other benefits of the corporate form of organization.

Question 24 (TRUE or FALSE?) Interest income received by a corporation is not taxed under the new tax law, 2017 Tax Cut and Jobs Act (TCJA).

Question 25 (TRUE or FALSE?) A proprietorship is is a small corporation which, under Subchapter S of the Internal Revenue Code, elects to be taxed as S corporation yet retains limited liability and other benefits of the corporate form of organization.

Question 26 (TRUE or FALSE?) Operating current assets are the current assets used to support operations, such as cash, accounts receivable, and inventory and does not include short-term investments.

Question 27 (TRUE or FALSE?) Increases in current liabilities such as accounts payable decrease cash.

Question 28 (TRUE or FALSE?) Dividing net income by the number of shares outstanding gives earnings per share (EPS).

Question 29 (TRUE or FALSE?) Total net operating capital = NOWC + Operating long-term assets.

Question 30 (TRUE or FALSE?) When a firm takes out a loan that must be repaid within a year, it signs an IOU called a bond.

Answer 1

Answer 1) FALSE

Current assets normally include fixed assets such as buildings, land, and machinery. This is FALSE.

Current assets include cash and inventory which can be use or sold quickly.

Answer 2) FALSE

ROE is given by:

ROE = Net Income / Shareholder Equity

Answer 3) FALSE. The times-interest-earned (TIE) uses net income rather than EBIT because dividends is paid with pre-tax dollars and therefore the firm’s ability to pay current dividends is not affected by taxes.

TIE = EBIT / Interest Expemse

It is a company's ability to pay its debt.

Answer 4) FALSE. The ratio of gross income to common equity measures the return on total assets

Return on assets is given by:

ROA = Net Income / Average Total Assets

Answer 5) TRUE. Inventories may result in losses in a bankruptcy because inventories are the least liquid of a firm’s current assets.

Answer 6) FALSE

Return on assets is given by:

ROA = Net Income / Average Total Assets

Answer 7) TRUE. If the firm’s assets generate a higher pre-tax return than the interest rate on debt, then the shareholders’ returns are magnified, or “leveraged.

Answer 8) FALSE:

Net Profit Margin is given by:

Net Profit Margin = ( Net Income / Revenue ) * 100

Answer 9) TRUE. If the ROIC is greater than the company’s weighted average cost of capital (WACC), then the company usually is adding value.

Answer 10) FALSE:

Net Profit Margin is given by:

Net Profit Margin = ( Net Income / Revenue ) * 100

Answer 11) TRUE

Market debt ratio = Total liabilities/(Total liabilities + Market value of equity)

Answer 12) TRUE

The current ratio measures liquidity by comparing the current assets to the current liabilities and it is equal to current assets divided by current liabilities.

Answer 14) FALSE

Window dressing is a technique employed by firms to make their financial statements look BETTER than they really are.

Answer 15) TRUE. The extent to which a firm uses debt financing is called financial leverage.

Answer 16) FALSE

It is actually opposite.

Net operating working capital = current operating assets - current operating liabilities