7 Improved efficiency in managing inventory will generally be reflected in the inventory turnover ratio by a) A decrease in the ratio from one period to the next; b) An increase in the ratio from one period to the next; c) No change in the ratio from one period to the next; d) The inventory turnover ratio does not reflect management efficiency. 6) Increased volume of credit sales will always a) Increase the receivables turnover ratio; b) Decrease gross operating margin as a percentage of sales; c) Decrease the days inventory outstanding; d) Both a and c. e) None of the above. 1

7) Which of the following ratios is considered a measure of liquidity risk? a) Dividend yield ratio; b) Gross operating margin; c) Earnings per share; d) Price-earnings ratio; e) Acid test ratio. 8) The return on capital employed ratio a) Is a measure of profitability; b) Considers the financing brought in by all creditors and shareholders; c) Is a measure of short-term solvency; d) Is based on average shareholders equity as compared to profit for the period before interest; e) Reflects the funds made available by the creditors of the compan