GetPage 4 
MODULE 45 PERFORMANCE MEASURES
37. What is the free cash flow for 2009?
a. $36,000,000
b. $30,000,000
c. $29,000,000
d. $26,000,000
38. Which of the following is not a measure of asset utilization?
a. Inventory turnover.
b. Average accounts receivable collection period.
c. Fixed asset turnover.
d. Debt to total assets.
39. What financial analysis technique would imply benchmarking with other firms?
a. Horizontal analysis.
b. Vertical analysis.
c. Cross-sectional analysis.
d. Ratio analysis.
Items 40 and 41 are based on the following information:
The Dawson Corporation projects the following for the year 2009:
Earnings before interest and taxes
Interest expense
Preferred stock dividends
Common stock dividend payout ratio
Common shares outstanding
Effective corporate income tax rate
$35 million
5 million
4 million
30%
2 million
40%
**40. The expected common stock dividend per share for
Dawson Corporation for 2009 is
a. $2.34
b. $2.70
c. $3.90
d. $2.10
2009 Operations
Sales*
$350,000
Cost of goods sold
160,000
Interest expense
3,000
Income taxes (40% rate)
48,000
Dividends declared and paid in 2009
60,000
Administrative expense
67,000
* All sales are credit sales.
Current Assets
12/31/08
12/31/09
Cash
$ 20,000
$10,000
Accounts receivable
100,000
70,000
Inventory
70,000
80,000
Other
20,000
20,000
**42. McKeon Company’s debt-to-total-asset ratio at
12/31/09 is
a. 0.352
b. 0.315
c. 0.264
d. 0.237
**43. The 2009 accounts receivable turnover for McKeon
company is
a. 1.882
b. 3.500
c. 5.000
d. 4.118
**44. Using a 365-day year, McKeon’s inventory turnover
is
a.
b.
c.
d.
to trade at a price/earnings ratio of eight, the market price per share (to the nearest dollar) would be
a. $125
b. $ 56
c. $ 72
d. $ 68
Items 42 through 46 are based on the following information:
The data presented below show actual figures for selected accounts of McKeon Company for the fiscal year ended December 31, 2009. McKeon’s controller is in the process of reviewing the 2009 results. McKeon
37. What is the free cash flow for 2009?
a. $36,000,000
b. $30,000,000
c. $29,000,000
d. $26,000,000
38. Which of the following is not a measure of asset utilization?
a. Inventory turnover.
b. Average accounts receivable collection period.
c. Fixed asset turnover.
d. Debt to total assets.
39. What financial analysis technique would imply benchmarking with other firms?
a. Horizontal analysis.
b. Vertical analysis.
c. Cross-sectional analysis.
d. Ratio analysis.
Items 40 and 41 are based on the following information:
The Dawson Corporation projects the following for the year 2009:
Earnings before interest and taxes
Interest expense
Preferred stock dividends
Common stock dividend payout ratio
Common shares outstanding
Effective corporate income tax rate
$35 million
5 million
4 million
30%
2 million
40%
**40. The expected common stock dividend per share for
Dawson Corporation for 2009 is
a. $2.34
b. $2.70
c. $3.90
d. $2.10
2009 Operations
Sales*
$350,000
Cost of goods sold
160,000
Interest expense
3,000
Income taxes (40% rate)
48,000
Dividends declared and paid in 2009
60,000
Administrative expense
67,000
* All sales are credit sales.
Current Assets
12/31/08
12/31/09
Cash
$ 20,000
$10,000
Accounts receivable
100,000
70,000
Inventory
70,000
80,000
Other
20,000
20,000
**42. McKeon Company’s debt-to-total-asset ratio at
12/31/09 is
a. 0.352
b. 0.315
c. 0.264
d. 0.237
**43. The 2009 accounts receivable turnover for McKeon
company is
a. 1.882
b. 3.500
c. 5.000
d. 4.118
**44. Using a 365-day year, McKeon’s inventory turnover
is
a.
b.
c.
d.
to trade at a price/earnings ratio of eight, the market price per share (to the nearest dollar) would be
a. $125
b. $ 56
c. $ 72
d. $ 68
Items 42 through 46 are based on the following information:
The data presented below show actual figures for selected accounts of McKeon Company for the fiscal year ended December 31, 2009. McKeon’s controller is in the process of reviewing the 2009 results. McKeon