Question

1. Which of the following would be considered good news for a company?
a. Its return on assets decreases
b. Its return on equity stays the same
c. Its profit margin increases
d. Its earnings per share decreases
2. A company reports net income of $45,000 when the balance in stockholder's equity increased from $200,000 to $300,000. What is the company's return on equity?
a. 22.5%
b. 15.0%
c. 18.0%
d. 9.6%
3. Which of the following ratios assists in evaluating a company's ability to pay its short-term obligations?
a. Current ratio
b. Debt to equity ratio
c. Debt to assets ratio
d. Return on assets
4. Liquidity refers to:
a. The ability to be profitable.
b. The ability to pay short-term obligations.
c. The ability to generate cash from receivables.
d. The ability to profit from sales.
5. Which of the following would likely be considered bad news for a company?
a. Its inventory turnover ratio decreased dramatically
b. Its quick ratio increased significantly
c. Its receivables turnover ratio increased slightly
d. Its current ratio was unchanged
6. A company has a current ratio of 1.5. This means that:
a. The company has $1.50 in current assets for every $1.00 in current liabilities.
b. The company earned $1.50 per share of stock.
c. The company has more current liabilities than current assets.
d. None of the above.
7. A company reports $45,600 in cost of goods sold in a year when its inventory increased from $6,000 to $8,600. What was the company's inventory turnover ratio?
a. 5.3
b. 7.6
c. 6.2
d. 8.1
8. Solvency refers to:
a. The ability to sell inventory.
b. The ability to pay short-term obligations.
c. The ability to generate cash from receivables.
d. The ability to pay long-term obligations.
9. Which of the following ratios is not a solvency ratio?
a. Debt to assets ratio
b. Debt to equity ratio
c. Times interest earned ratio
d. Inventory turnover ratio
10. The debt to assets ratio can be viewed as a good indicator of a company's:
a. Stock price.
b. Capital structure.
c. Liquidity.
d. Profitability.
11. Which of the following is not one of the three components in a DuPont analysis?
a. Operating efficiency
b. Asset effectiveness
c. Capital structure
d. All of the above are components of a DuPont analysis


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  • CreatedJuly 16, 2015
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