Week 2

Question 1 Which one of the following statements about trend analysis is NOT correct?

 The Standard Industrial Classification (SIC) System is used to identify benchmark firms.

Question 2 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?4.15 times

Question 3 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.

$1,651 million

Question 4 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.

Question 5 Peer group analysis can be performed by

d) Only a and b relate to peer group analysis

Question 6  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?

$881,234