(Multiple choice) 1. A company has total assets of $500,000 and noncurrent assets of $400,000. Current liabilities...

Question:

(Multiple choice)
1. A company has total assets of $500,000 and noncurrent assets of $400,000. Current liabilities are $40,000. What is the current ratio?
a. 12.5
b. 10.0
c. 2.5
d. Cannot be determined without additional information.

2. Which of the following would not change the receivables turnover ratio for a retail company?
a. Increases in the retail prices of inventory.
b. A change in credit policy.
c. Increases in the cost incurred to purchase inventory.
d. None of the above.

3. Which of the following ratios is used to analyze liquidity?
a. Earnings per share.
b. Debt-to-equity ratio.
c. Current ratio.
d. Both (a) and (c).

4. Positive financial leverage indicates
a. Positive cash flow from financing activities.
b. A debt-to-equity ratio higher than 1.
c. A rate of return on assets exceeding the interest rate on debt.
d. A profit margin in one year exceeding the previous year€™s profit margin.

5. If a potential investor is analyzing three companies in the same industry and wishes to invest in only one, which ratio is least likely to affect the investor€™s decision?
a. Quick ratio.
b. Earnings per share.
c. Price to earnings ratio.
d. yield ratio.

6. A company has quick assets of $300,000 and current liabilities of $150,000. The company purchased $50,000 in inventory on credit. After the purchase, the quick ratio would be
a. 2.0
b. 2.3
c. 1.5
d. 1.75

7. The average days€™ supply in inventory for Natural Foods Stores is 14.6 days. The company reported cost of goods sold in the amount of $1,500,000 and total sales of $2,500,000. What is the average amount of inventory for Natural Foods?
a. $102,740
b. $171,233
c. $100,000
d. $60,000

8. Given the following ratios for four companies, which company is least likely to experience problems paying its current liabilities promptly?

Receivable Turnover Ratio Quick Ratio 1.2 1.2 1.0 58 45 55 a. b. C. d. .5 60 의었으

9. A decrease in selling and administrative expenses would impact what ratio?
a. Fixed asset turnover ratio.
b. Times interest earned ratio.
c. Debt-to-equity ratio.
d. Current ratio.

10. A creditor is least likely to use what ratio when analyzing a company that has borrowed funds on a long-term basis?
a. Cash coverage ratio.
b. Debt-to-equity ratio.
c. Times interest earned ratio.
d. Profitmargin.

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...