Question
1. Which of the following formulas gives the inventory turnover ratio? a.Average inventory/Cost of goods sold. b.Net credit sales/Average inventory. c.Average inventory/Net credit sales. d.Cost
1.
Which of the following formulas gives the inventory turnover ratio?
a.Average inventory/Cost of goods sold.
b.Net credit sales/Average inventory.
c.Average inventory/Net credit sales.
d.Cost of goods sold/Average inventory.
2.
Which of the following is a total dollar measure of liquidity?
a.Number of days' sales in inventory.
b.Working capital.
c.Accounts receivable turnover ratio.
d.Cash-to-cash operating cycle.
3.
Which of the following is considered a profitability ratio?
a.Debt-to-equity ratio.
b.Acid-test ratio.
c.Earnings per share.
d.Inventory turnover ratio.
4.
In considering equity and debt financing, which of the following statements is true?
a.In general, the higher the proportion of total debt-to-equity ratio, the greater the likelihood the firm will have difficulty in meeting its obligations in some future period.
b.Interest and dividend payments are required to be made by the issuing corporation.
c.Compared to equity financing, debt is a more expensive source of funding.
d.Most firms prefer to have no debt and rely on equity financing.
5.
Crimson Company declared and paid $1,000,000 in dividends to the common stockholders. The effect of this transaction is that the
a.current ratio increased.
b.earnings per share increased.
c.debt-to-equity ratio increased.
d.earnings per share decreased.
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