22

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Both my Net Profit Margin and my Total Asset Turnover are expected to decrease over the next year. What impact, if any, will this likely have on my Return on Assets? Select one:

A. ROA will increaseB. ROA will decreaseC. There will be no impact

Question23

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Which one of the following successful strategies will increase the Return on Assets (ROA)? Select one:

A. Increase the investment in assets used in the businessB. Increase the operating profit marginC. Decrease sales volumeD. Decrease the annual depreciation amounts of long-lived assets

Question24

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Other things held constant, which of the following will NOT affect the current ratio, assuming an initial current ratio greater than 1.0?

Select one:

A. Fixed assets are sold for cashB. Long-term debt is issued to pay off current liabilitiesC. Accounts receivable are collected in cashD. Cash is used to pay off accounts payableQuestion26

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Acme Inc. included the following information in its annual report: By how much did Cost of Goods Sold increase from 20X1 to 20X2?

Select one:

A. 10.9%B. 12.2%C. 13.1%D. 15.0%

Question27

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My company is going to lease a scissor lift from A-1 Equipment that will help us clean the windows on our buildings. If we were to purchase the lift, it would cost $20,000. The lift has an estimated life of 10 years and we have an 8-year lease term. Our monthly lease payment is going to be $200. At the end of the lease, A-1 Equipment will retain ownership of the lift. We do not have an option to purchase the equipment. Based on just this information, how will we need to account for this leased item on our financial records.

Select one:

A. The item must be accounted for as a Capital Lease.B. The item must be accounted for as an Operating Lease.C. There is insufficient information given to assess whether or not this needs to be accounted for as either a Capital or Operating Lease.

Question28

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Compared to a firm with capital leases, a firm with operating leases will have

Select one:

A. a higher ROAB. a lower ROAC. a higher Debt-to-Equity ratioD. none of the above since operating leases are considered "off balance sheet"