Question

Question 2

To measure how long it takes customers to pay their balances wewould look at the

Question 2 options:

a) Inventory turnover ratio

b) Current ratio

c) Average collection period

d) Receivables turnover

Question 3

A company with a decreasing interest expense would see whatchange to its times interest earned?

Question 3 options:

a) An increase

b) A decrease

c) No change

d) Cannot be determined

Question 4

As we look at how a company’s ratios have changed over time weneed to consider all of these except:

Question 4 options:

a) The company’s industry

b) The direction the values have moved

c) The impact of inflation

d) None of the above

Question 6

Asset utilization ratios include all but which of thefollowing?

Question 6 options:

a) Receivable turnover

b) Inventory turnover

c) Average collection period

d) Return on assets

Question 7

All else staying equal, what impact might we assume if acompany’s debt to total assets increases?

Question 7 options:

a) Times interest earned will increase

b) Times interest earned will decrease

c) Return on equity will decrease

d) Profit margin will increase

Question 8

Higher inflation rates can show ‘false outcomes’ by

Question 8 options:

a) Lowering sales

b) Increasing sales

c) Lowering profits

d) None of the above

Question 9

If a company has a quick ratio very close to its current ratiowhat might we conclude about their inventory?

Question 9 options:

a) Inventory makes up a large portion of their current assets

b) Inventory makes up a small portion of their current assets

c) Inventory makes up all the company’s current assets

d) This does not give us information about inventory

Question 10

A company with an average collection period of 30 days in anindustry where the average collection period is 28 days would besaid to

Question 10 options:

a) Outperform the industry

b) Underperform the industry

c) Have no meaningful difference

d) None of the above

Question 12

What might we conclude about a company with a profit margin of10%?

Question 12 options:

a) It is preforming strongly

b) It is earning a sufficient return on its sales

c) It is outperforming its industry

d) We are limited by not knowing the industry average

Question 15

If a company is becoming less liquid which ratio group would weexpect to be impacted first?

Question 15 options:

a) Profitability ratios

b) Asset utilization ratios

c) Liquidity ratios

d) Debt utilization ratios