Multiple Choice Questions 1 Which of the following transactions could increase a firms current ratio a Purchase of inventory for cash b Payment of accounts payable c Collection of accounts receivable d Purchase of temporary investments for cash 2 Total Liabilities 4 Total Equity equals a Times Inte...

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Multiple Choice Questions 1. Which of the following transactions could increase a firms current ratio? a. Purchase

Question:

Multiple Choice Questions
1. Which of the following transactions could increase a firm’s current ratio?
a. Purchase of inventory for cash
b. Payment of Collection of Purchase of temporary investments for cash
2. Total Liabilities 4 Total Equity equals:
a. Times Interest Earned Ratio
b. Turnover Ratio
c. Debt-to-Equity Ratio
d. Receivables Turnover Ratio
3. Which of the following ratios is not a debt management ratio?
a. Times interest earned
b. Debt-to-equity ratio
c. long-term debt-to-equity ratio
d. Return on equity ratio
4. When analyzing a company’s debt-to-equity ratio, if the ratio has a value that is greater than one, then the company has:
a. Less debt than equity
b. More debt than equity
c. Equal amounts of debt and equity
d. None of these are correct
5. Cost of goods sold divided by average inventory is the formula to compute:
a. turnover
b. Inventory turnover
c. Gross profit percentage
d. Return on sales percentage
6. A firm’s ratio is typically computed as follows:
a. Net Sales ÷ Average Total Assets
b. Gross Profit ÷ Net Sales
c. Operating Income ÷ Net Sales
d. Net Income + [Interest Expense x (1 – Tax Rate)] ÷ Average Total Assets
7. Which of the following ratios is used to measure a firm’s efficiency at using its assets?
a. Current ratio
b. ratio
c. return on sales ratio
d. Return on equity
Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... 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.