1.The acid test ratio and current ratio is calculated by dividing current assets over current liabilities. true or false

2. Inventory turnover ratio is computed by dividing the cost of goods available for sale over average merchandise inventories. true or false

3. Days sales outstanding (DSO) or average collection is calculated by dividing receivable turnover over the average accounts receivables. true or false

4. Debt ratio measures the percentage of funds provided by all liabilities. true or false

5. The liquidity ratios higher than the industry average are considered relevant by a supplier who is trying to decide whether to extend credit to a company . true or false

6. The Du Pont equation provides a framework that ties together a firms profitability, asset efficiency, and use of debt . true or false

7. Current liabilities consist of accounts payable, short-term notes payable, long-term debt, and accrued expenses. true or false

8. Working capital is the sum of total current assets and total current liabilities . true or false

9. Current assets include cash, marketable securities, accounts receivable, notes receivable, inventories, and prepaid expenses. true or false

10. Times interest earned is used to determine the ability of the company to pay interest and it is calculated by dividing earnings before interest and taxes over the interest expense. true or false

11. Liquidity ratios determine whether the company can pay all its obligations. true or false

12. Creditors prefer low debt ratios because the lower the ratio, the greater the cushion against creditors losses in the event of a liquidation. true or false

13. The acid test ratio and current ratio would be the same if there is no inventory and prepaid expenses in the balance sheet. true or false

14. Return on equity is a product of net income and equity. true or false

15 Asset management ratios measure how effectively a firm is managing its economic resources acquired by an enterprise arising from past transactions. true or false

16. A high current ratio could mean that the company has a lot of money tied up in nonproductive assets, such as excess cash or marketable securities. true or false

7. A company has EBITDA of P600 million, interest payments of P60 million, lease payments of P40 million, and required principal payments (due this year) of P30 million. What is its EBITDA coverage ratio ? * (2 Points) 4.92:1 4.61:1 10:1 6:1 Option 2 9. A company has total cash sales of P180,000 and total credit sales of P200,000. It has gross profit of 40% of sales. Total expenses amounted to P 60,000. What is the net profit margin? * (2 Points) 24.21% 10% 44.21% 60.52% 12. A company has total assets of P150 million, total liabilities of P30 million. What is the debt to equity ratio? * (2 Points) 0.25:1 O 0.80:1 0.20:1 5:1 Option 2 17. A company has total cash sales of P180,000 and total credit sales of P200,000. It has a gross profit of 40% of sales. It has an average merchandise inventory of P 26,000. What is the age of inventory using 360 days? * (2 Points) 41 days 62 days 144 days 216 days 18. A company has total cash sales of P180,000 and total credit sales of P200,000. It has gross profit of 40% of sales. It has an average account receivable of P 60,000. What is the receivable turnover? * (2 Points) 3.33 times 6.33 times 3.0 times 0 4,0 times Option 2 24. If the stock has a par value of 10 and it is currently selling at P20 and the price-earnings ratio is 8:1, what is earnings per share (EPS)? * (2 Points) 0 2.5 per share 1.25 per share 160 per share 80/share 25. A company has P200 million of sales and P10 million of net income. Its total assets are P100 million, financed half by debt and half by common equity. What is its profit margin? * (2 Points) 5% 10% 20% 4% Option 2 7. A company has EBITDA of P600 million, interest payments of P60 million, lease payments of P40 million, and required principal payments (due this year) of P30 million. What is its EBITDA coverage ratio? * (2 Points) 4.92:1 4.61:1 10:1 6:1 Option 2