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Fixed Charge Coverage Ratio measures the company's overall ability to service their debt and lease payments. Which company has a more favorable FCCR?

Company A - 2.50x

Company B - 1.15x

a.

Company A

b.

Company B

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You are purchasing common stock in a company. All things being equal, which company would you prefer to purchase based on value?

Company A - PE Ratio of 10x

Company B - PE Ratio of 20x

a.

Company A

b.

Company B

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When measuring a company's liquidity, you may analyze all of the assets/liabilities noted below except (select the one that does not apply):

a.

Cash

b.

Marketable Securities

c.

Accounts Receivables

d.

Accounts Payable

e.

Plant & Equipment

Question 9

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Calculate the Inventory Turnover of the company with the following information:

Sales = $250,000

COGS = $150,000

Accounts Receivable - $150,000

Inventory = $25,000

a.

6.0x

b.

3.0x

c.

7.0x

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The Net Profit Margin ratio measures the profitability of a company, analyzing the net profit relative to the sales. If the net profit margin declined in 2021 from 2020, we could assume the following except (select the one that does not apply):

a.

Revenues declined in 2021

b.

COGS increased in 2021

c.

The company purchased significant assets in 2021