A firm with a Current Ratio of 2.0 is twice as profitable as a firm with a Current Ratio of 1.0
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A firm with a Current Ratio of 2.0 is twice as profitable as a firm with a Current Ratio of 1.0.
True |
False |
Question 2 2 pts All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.<br>
0 true_false_question
All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.<br>
All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.
True |
False |
Question 3 2 pts In general, firms want their Times Interest Earned ratio to be as low as possible.<br>
0 true_false_question
In general, firms want their Times Interest Earned ratio to be as low as possible.<br>
In general, firms want their Times Interest Earned ratio to be as low as possible.
True |
False |
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Question 4 2 pts A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.<br>
0 true_false_question
A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.<br>
A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.
True |
False |
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Question 5 2 pts If a firm's current ratio is less than 1.0, it indicates that:<br>
0 multiple_choice_question
If a firm's current ratio is less than 1.0, it indicates that:<br>
If a firm's current ratio is less than 1.0, it indicates that:
The firm had negative net income for the year |
The firm will be unable to pay its short term loans which come due this year |
Current Assets are less than Current Liabilities |
The firm is insolvent |
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Question 6 2 pts A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:<br>
0 multiple_choice_question
A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:<br>
A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:
liquid |
profitable |
risky |
nuts |
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Question 7 2 ptsSkip to question text.
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<p>Refer to the following income statement for the Classic Cappuccino Corporation (CCC) to answer the question that follows:</p> <table width="400" border="0" cellspacing="0" cellpadding="0"> <tr> <td>Total Revenue</td> <td>$50,000</td> </tr> <tr> <td>Operating Expenses</td> <td>25,000</td> </tr> <tr> <td>Depreciation</td> <td><u>1,000</u></td> </tr> <tr> <td>Operating Profit</td> <td>24,000</td> </tr> <tr> <td>Interest Expense</td> <td><u>1,000</u></td> </tr> <tr> <td>Before-Tax Profit</td> <td>23,000</td> </tr> <tr> <td>Taxes</td> <td><u>6,900</u></td> </tr> <tr> <td>After-Tax Profit</td> <td>$16,100</td> </tr> </table> <p>CCC’s Net Profit Margin is:</p> <br>
Refer to the following income statement for the Classic Cappuccino Corporation (CCC) to answer the question that follows:
Total Revenue | $50,000 |
Operating Expenses | 25,000 |
Depreciation | 1,000 |
Operating Profit | 24,000 |
Interest Expense | 1,000 |
Before-Tax Profit | 23,000 |
Taxes | 6,900 |
After-Tax Profit | $16,100 |
CCC’s Net Profit Margin is:
16.1% |
23.0% |
32.2% |
$161,000 |
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Question 8 2 pts If a firm's PE ratio was 22, you would know that:<br>
0 multiple_choice_question
If a firm's PE ratio was 22, you would know that:<br>
If a firm's PE ratio was 22, you would know that:
Profits over Earnings = 22 |
The firm will probably not have any trouble meeting its debt obligations this year |
The firm's stock price is expected to increase 22% |
Investors are willing to pay 22 times the firm's EPS for a share of the firm's stock. |
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Question 9 2 pts Which of the following ratios would a potential creditor be most interested in?<br>
0 multiple_choice_question
Which of the following ratios would a potential creditor be most interested in?<br>
Which of the following ratios would a potential creditor be most interested in?
Times Interest Earned |
Economic Value Added (EVA) |
Return on Equity (ROE) |
Net Profit Margin |
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Question 10 2 pts The Du Pont equation allows you to gain additional insight into a firm’s<br>
0 multiple_choice_question
The Du Pont equation allows you to gain additional insight into a firm’s<br>
The Du Pont equation allows you to gain additional insight into a firm’s
Liquidity |
Sources of ROE |
Sales potential |
Sources of income |
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