Relative to using "ROI" (return on investment) as a way to evaluate investment centers, the measure "RI" (residual income) encourages those responsible for investment decisions to move forward with investments that have a lower return than the current ROI, provided that the expected return is more than the minimum rate of return the firm requires for its investments.

True

False

When an item is described as a "leading indicator," it means that that the items is among the most important of varying indicators.

True

False

Profitability Ratios typically include all of the following except:

Return on Assets.

Gross Margin Ratio.

Return on Equity.

Quick Ratio.

The Cash Conversion Cycle (CCC) article appearing in the Journal of Accountancy makes the point that the higher the CCC, the safer the company should be.

True

False

With the Current Ratio, the smaller the number the better it is.

True

False

When analyzing financial statements, a "horizontal" analysis typically refers to looking at some element(s) of the financial statements, and seeing how they change over time.

True

False

Solvency" ratios generally have a more long-term focus versus "liquidity" ratios.

True

False

In the module video addressing Triple Bottom Reporting, "sustainability" is described as:

achieving social objectives.

achieving social and environmental objectives.

the overlap of social, financial, and environmental objectives.

when revenues equal expenses.

Return on Investment (ROI) typically measures the percentage return that a company earns on its assets.

True

False

When a division of a company is deemed a "profit center," the division is less comprehensive than a division that is deemed an "investment center."

True

False

If ABC Company has a Current Ratio of 2, its Quick Ratio, will probably be a higher number (such as 4).

True

False

If Net Income increases, while Sales remain the same, then

the Debt to Assets Ratio increases.

the Profit Margin Ratio increases.

the Inventory Turnover Ratio decreases.

All of the above occur.

Our textbook authors suggest that complexity of the calculation is the number one problem with using Segment Income to evaluate divisions of a company.

True

False

The Cash Conversion Cycle (CCC)is best described as the typical time it takes:

for investors to get back their investment.

to buy inventory, sell it, and collect on sales.

for received customer checks to clear the bank, and make cash available.

for a company to collect on credit sales.

Under the Balanced Scorecard, which of the following is best included in "Learning and Growth?"

Number of Employee Accidents.

Inventory Turnover.

Internal Business Processes.

Market Share.