ANSWER ALL

Refer to Scenario 9.1. Dario points to some important key metrics that he used to arrive at his recommendation to increase the companys debt. One metric is the companys current _____________. If the company can increase this ratio, they can decrease their tax burden.

a net profit margin

b average collection period

c inventory turnover

d interesg coverage

In his recommendations, Dario was sure to call out how certain ratios will be affected by changes in the companys financial structure. He has highlighted how a decrease in the companys tax burden will also increase the companys __________, which could help assure investors that the company is doing a better job of maximizing its earnings.

a inventory turn over

b current ratio

c average collection period

d net profit margin

Jesse is the chief financial officer (CFO) for an office supply distribution company that recently lost one of its biggest customers to a new online-only distributor.

Refer to Scenario 9.2. Knowing that revenues will be significantly lower until the sales team can bring in new customers, Jesse takes a hard look at the companys ___________ to ensure that they can cover salaries, taxes, and fixed debt payments in the near-term.

a profitbility ratios

b current ratios

c liquidity ratios

d leverage ratios

8. Refer to Scenario 9.2. Another tool that Jesse can use to help the company understand how the loss of revenues will affect their bottom line is the _____________, which shows the relationship between the companys budgeted sales and net income. Jesse will show how the net income from the original projections will differ now that projected revenues are down.

a cash budget

b budgeted income statement

c master budget

d budgeted balance sheet

9. Zahra manages accounts receivable for a medical billing company. Many of their customers struggle to pay their bills on time, which often leaves the company strapped for cash. When the company needs to generate quick cash to pay short-term debts, they rely on ________. Zahra and her team have fewer receivables to manage when the company uses this kind of financing.

a lines of credit

b spontaneous financing

c factors

d trade edits

10. Aoife earned a Doctor of Pharmacy degree and then opened a small drug store where she fills prescriptions and also sells toiletries, over-the-counter medications, candy, and other sundries. As a new business, many of her suppliers require that she pay all invoices up-front. Aoife hopes that as her business credit rating improves, they will begin to offer her _________ so that she has a chance to earn revenues on items before she pays invoices.

a lines of credit

b spontaneous financing

c factors

d trade credits