Question : 71.Which of the following statement correct regarding the quick ratio? A. The : 1257080

 

 

71.Which of the following statement is correct regarding the quick ratio?   

A. The numerator for the quick ratio is current assets – inventory – accounts receivable.

 

B. The numerator for the quick ratio is current assets.

 

C. The quick ratio is also called the working capital ratio.

 

D. The quick ratio is a more conservative variation of the current ratio.

 

 

72.Two ratios that provide insight on the relationship between credit sales and receivables are:   

A. Current ratio and inventory turnover ratio.

 

B. Accounts receivable turnover and average days to collect receivables.

 

C. Average days to collect receivables and asset turnover.

 

D. Accounts receivable turnover and current ratio.

 

 

73.Cost of goods sold/average inventory is the formula for which of these analytical measures?   

A. Number of day’s sales in inventory

 

B. Return on investment

 

C. Inventory turnover

 

D. Debt to assets ratio

 

 

74.Which ratios measure a company’s long-term debt paying ability and its financing structure?   

A. Solvency

 

B. Liquidity

 

C. Profitability

 

D. None of these answers is correct.

 

 

75.Assume that you are considering purchasing some of a company’s long-term bonds as an investment. Which of the company’s financial statement ratios would you probably be most interested in?   

A. Debt to assets ratio

 

B. Debt to equity

 

C. Plant assets to long-term liabilities

 

D. All of these answers are correct.

 

 

76.Starwood Corporation has current assets of $200,000, total current liabilities of $750,000 net credit sales of $1,300,000, beginning accounts receivable of $65,000 and ending accounts receivable of $69,000. What is Starwood’s accounts receivable turnover?   

A. 21.8 times

 

B. 19.4 times

 

C. 22.4 times

 

D. 5.8 times

 

 

77.Earnings before interest and taxes divided by interest expense is the formula for which of these analytical measures?   

A. Debt to assets ratio

 

B. Earnings per share

 

C. Return on investment

 

D. Number of times interest is earned

 

 

78.Net income divided by sales is the formula for which of these analytical measures?   

A. Return on assets

 

B. Return on equity

 

C. Earnings per share

 

D. Net margin

 

 

79.If the company purchased a $60,000 piece of equipment by paying $30,000 and having the rest financed with a short-term note from the bank, then immediately after this transaction what is the expected impact on the current ratio?   

A. Current assets decrease and current liabilities increase by the same amount therefore, the current ratio decreases.

 

B. Current liabilities decrease therefore, the current ratio decreases.

 

C. Current assets and current liabilities decrease by the same amount therefore, the current ratio increases.

 

D. Current assets decrease therefore, the current ratio increases.

 

 

80.Which ratio measures how effectively a company is using assets to generate revenue?   

A. Net margin

 

B. Plant assets to long-term liabilities

 

C. Asset turnover

 

D. Inventory turnover