Q1When considering the working capital ratio for a company with inventory, the acid test ration will

Select one: a. Always be better

b. Always be worse

c. Always be the same

d. May be better or worse Clear my choice

Question2If ROCE declines from 12% to 10% from one year to the next and shareholders' equity has remained constant, it is most likely because

Select one:

a. PBIT is higher and/or long-term debt is lower

b. PBIT is lower and/or long-term debt is lower

c. PBIT is lower and/or long-term debt is higher

d. PBIT is higher and/or long-term debt is higher

Q3

Sales have increased since the previous year and the gross-profit-to-sales ration has increased but the operating-profit-to-sales ratio has fallen. This is most likely because

Select one:

a. Expenses have increased

b. Taxes are higher

c. Selling price is lower

d. Cost of sales has not been effectively controlled

Q4

Risk is highest when

Select one:

a. Degree of operating leverage is lower and interest cover ration is lower

b. Degree of operating leverage is higher and interest cover ration is higher

c. Degree of operating leverage is lower and interest cover ration is higher

d. Degree of operating leverage is higher and interest cover ration is lower

Q5

The asset turnover ratio represents

Select one:

a. How long assets are kept before they are sold

b. The efficiency of use of assets to generate sales

c. New capital expenditure

d. The period over which assets are depreciated