5 Simple accounting questions Ratios

1)

When a company's sales revenues are growing,

Select one:

a.cost of goods sold must grow at a lower rate to improve the gross profit margin

b.gross profit margin will increase in all situations

c.cost of goods sold must grow at a higher rate to improve the gross profit margin

d.none of the choices

2)

If a company's debt-to-assets ratio is equal to 60% and if it has the total liabilities balance of $120,000, how much is the company's total assets balance?

Select one:

a.$128,000

b.$200,000

c.$72,000

d.It cannot be determined from the information given.

3)

A company's working capital would always be positive if its current ratio is

Select one:

a.greater than 1

b.a positive decimal between 0 and 1

c.equal to 1

d.negative

4)

EBIT Percentage to Sales is calculated by dividing EBIT by

Select one:

a.Sales Revenue

b.Interest, taxes, depreciation, and amortization

c.Gross Profit

d.Net Profit

5)

The formula " (Sales Revenue - Cost of Goods Sold) Sales Revenue" produces

Select one:

a.an amount referred to as Net Profit

b.a percentage referred to as Net Profit Margin

c.a percentage referred to as Gross Profit Margin

d.an amount referred to as Gross Profit