QUESTION 1

In order to calculate gross margin, subtract cost of goods sold (COGS) from sales. In order to calculate gross margin percentage, divide the gross margin by ____________.

		earnings
		sales
		COGS
		expenses

1.5 points

QUESTION 2

_______________ is a good measure for determining how well the business is utilizing invested capital.

		Return on equity
		Return on assets
		Cash flow debt coverage
		Current ratio

1.5 points

QUESTION 3

______________ shows how well a company is utilizing its assets to make money.

		Return on equity
		Return on assets
		Debt coverage ratio
		Quick ratio

1.5 points

QUESTION 4

Consider the information from the following four companies:

Company A: $1 million in sales, $30,000 profit

Company B: $500,000 in sales, $20,000 profit

Company C: $2 million in sales, $30,000 profit

Company D: $250,000 in sales, $15,000 profit

Which company has the highest net profit margin?

		Company A
		Company B
		Company C
		Company D

1.5 points

QUESTION 5

In the instructors intro video, it was stated that many of these ratios should be reviewed over time in order to spot _______________.

		expenses
		debt
		trends
		profit

1.5 points

QUESTION 6

The current ratio measures how easily current bills can be paid. It is calculated by dividing current assets by ________________.

		investors equity
		current liabilities
		net income
		property, plant and equipment

1.5 points

QUESTION 7

The quick ratio is similar to the current ratio except that removes ______________ from the calculation.

		current assets
		current liabilities
		cash
		inventory and other illiquid assets

1.5 points

QUESTION 8

The debt/equity ratio is important becuase it essentially shows how much of the company's capital (money to work with) comes from equity and how much comes from debt.

True

False

1.5 points

QUESTION 9

The interest coverage ratio measures how well a company can pay its total liabilities.

True

False

1.5 points

QUESTION 10

Inventory turns measures how many times inventory is sold and replenished (turned over) during a given period of time.

True

False