1. Which of the following would be considered good news for a company? a. Its return on...

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 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 ?
a. 5.3
b. 7.6
c. 6.2
d. 8.1
8. 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.
10. The debt to assets ratio can be viewed as a good indicator of a company's:
a. Stock price.
b. 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. All of the above are components of a DuPont analysis
Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...