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23 Cards in this Set
- Front
- Back
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which of the following is the least effective measure of operating performance |
ROE |
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lease obligations are included in certain leverage ratios because leases |
represent long term fixed obligations |
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a firm with no leases has a long term debt ration of 50%. This means that the book value of equity |
equals the book value of long term debt |
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when the firms long term debt equity ratio is .98 the firm |
has less long term debt than equity |
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if a firms total debt ratio is greater than .5, then |
its debt equity ratio excess 1.0 |
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a times interest earned ratio of 5 indicates the firm |
earns significantly more than its interest obligations |
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if a firms cash coverage ratio is greater than its times interest earned ratio, then the |
firms assets are nut fully depreciated |
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an assets liquidity measures its |
ease and cost of being converted to cash |
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a firms quick ratio of .49 suggests the firm |
faces a potentially serious liquidity crisis |
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a firm has 600,000 in current assets and 150,000 in current liabilities. which of the following is correct if it uses cash to pay off 50,000 in accounts payable |
net working capital will not change |
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how would you interpret an inventory turnover ratio of 10.7? |
the firm has sufficient inventories to maintain sales for 34.1 days days sales in inventory = 365/ 10.7 = 34.1 |
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what are the annual sales for a firm with 400,000 in debt, a total debt ratio of .4 and an asset turnover of 3 |
3,000,000 |
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the inventory turnover ratio compares |
cost of goods sold to average inventory |
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when trip c corp compares its rations to industry averages, it has a higher current ratio, an average quick ratio, and a lower inventory turnover. What might you assume about TRI C |
its average inventory is too high |
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which one of the following statements is most likely correct for a firm with an average collection period of 90 days |
it is providing financing for approximately 25% of its annual sales |
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a firm reports a net profit margin of 10% on sales of 3 million when ignoring the effects of financing. If taxes are 200,000 how much is EBIT |
500,000 Net profit margin - (EBIT - Taxes) / sales |
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which of the following will allow your firm to achieve its targeted 16% ROA with an asset turnover of 2.5 |
a profit margin of 6.4 ROA= profit margin X asset turnover |
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what is the ROA of a firm with 150,000 in average receivables, which represents 60 days sales, average assets of 750,000 and a profit margin of 9% |
10.95% |
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last years return on equity was 30%. this year the ROE has decreased to 20% even though the firms earnings equaled last years earnings. the firm has no preferred stock. what caused the decrease? |
equity increased by 50% |
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which one of these costs accounts for the difference between accounting income and economic value added |
cost of capital |
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after tax operating income for a leveraged firm is defined as |
net income + after tax interest |
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which one of these changes indicates an improvement in a firms asset management efficiency |
an increase in the amount of assets per dollar sales |
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what is the market price of a share of stock for firm with 100,000 shares outstanding, a book value of equity of 3,000,000 and a market to book ratio of 3 |
90 |
