Question
1. Which of the following transactions affects the acid-test ratio? A:A new common stock issue is sold and equipment purchased. B:Receivables are collected. C:Inventory is
1. Which of the following transactions affects the acid-test ratio?
A:A new common stock issue is sold and equipment purchased.
B:Receivables are collected.
C:Inventory is liquidated for cash.
D:New common stock is sold and used to retire a debt issue.
2. Long-term creditors are likely to be least interested in a firm's A: liquidity ratios.
B:coverage ratios.
C:profitability ratios.
D:debt ratios
3. A firm's annual credit sales are $1.2 million and its average receivables are $150,000. Assuming a 360-day year, the average collection period is
A;20
B:45
C:30
D:60
4If an analyst wanted to compute a rough measure of a firm's financial risk, which of the following types of ratios would be preferred?
A:liquidity ratios
B:coverage ratios
C:profitability ratios
D:debt ratios
5. Firm A has a total asset turnover ratio of 5, a net profit margin of 2 percent, and return on equity of 15 percent. Its return on assets is
A:10
B:6
C:3
D:2
6.Common size income statements divide each account by:
A: revenues
B:total Assets
C:net Income
D:none of the above
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