# FIN600 – MODULE 2 QUIZ 1

### Resources:

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### Question 1

If a firm bases its growth projection on the rate of sustainable growth, and shows positive net income, then the:

Select one:a. Inventory will have to increase at the same rate, regardless of the current capacity level.b. Number of common shares outstanding will increase at the same rate of growth.c. Debt-equity ratio will have to increase.d. Debt-equity ratio will remain constant while retained earnings increase. e. Fixed assets, debt-equity ratio, and number of common shares outstanding will all increase.

### Question 2

A firm has 8202 shares of stock outstanding, sales of \$5000, net income of \$884, a price-earnings ratio of 13, and a book value per share of \$0.5. What is the market-to-book ratio?

(Your solution should not contain a dollar sign \$)

### Explanation

See below for the work for this problem: ### Question 3

A firm has total debt of \$7677and a debt-equity ratio of 0.5. What is the value of the total assets?

(Your solution should not contain a dollar sign \$)

### Explanation

See below for the work for this problem: ### Question 4

The inventory turnover ratio is measured as:

Select one:a. Total sales minus inventory.b. Inventory times total sales.c. Cost of goods sold divided by inventory. d. Inventory times cost of goods sold.e. Inventory plus cost of goods sold.

### Question 5

Projected future financial statements are called:

Select one:a. Plug statements.b. Pro forma statements. c. Reconciled statements.d. Aggregated statements.e. none of these.