Finance questions

A firm with a Current Ratio of 2.0 is twice as profitable as a firm with a Current Ratio of 1.0.

 

True
False

 

Question 2 2 pts All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.<br>
0 true_false_question
All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.<br>
All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.
True
False

 

Question 3 2 pts In general, firms want their Times Interest Earned ratio to be as low as possible.<br>
0 true_false_question
In general, firms want their Times Interest Earned ratio to be as low as possible.<br>
In general, firms want their Times Interest Earned ratio to be as low as possible.
True
False

 

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Question 4 2 pts A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.<br>
0 true_false_question
A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.<br>
A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.
True
False

 

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Question 5 2 pts If a firm’s current ratio is less than 1.0, it indicates that:<br>
0 multiple_choice_question
If a firm’s current ratio is less than 1.0, it indicates that:<br>
If a firm’s current ratio is less than 1.0, it indicates that:
The firm had negative net income for the year
The firm will be unable to pay its short term loans which come due this year
Current Assets are less than Current Liabilities
The firm is insolvent

 

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Question 6 2 pts A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:<br>
0 multiple_choice_question
A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:<br>
A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:
liquid
profitable
risky
nuts

 

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Question 7 2 ptsSkip to question text.
0 multiple_choice_question
<p>Refer to the following income statement for the Classic Cappuccino Corporation (CCC) to answer the question that follows:</p> <table width=”400″ border=”0″ cellspacing=”0″ cellpadding=”0″> <tr> <td>Total Revenue</td> <td>$50,000</td> </tr> <tr> <td>Operating Expenses</td> <td>25,000</td> </tr> <tr> <td>Depreciation</td> <td><u>1,000</u></td> </tr> <tr> <td>Operating Profit</td> <td>24,000</td> </tr> <tr> <td>Interest Expense</td> <td><u>1,000</u></td> </tr> <tr> <td>Before-Tax Profit</td> <td>23,000</td> </tr> <tr> <td>Taxes</td> <td><u>6,900</u></td> </tr> <tr> <td>After-Tax Profit</td> <td>$16,100</td> </tr> </table> <p>CCC’s Net Profit Margin is:</p> <br>
Refer to the following income statement for the Classic Cappuccino Corporation (CCC) to answer the question that follows:

Total Revenue $50,000
Operating Expenses 25,000
Depreciation 1,000
Operating Profit 24,000
Interest Expense 1,000
Before-Tax Profit 23,000
Taxes 6,900
After-Tax Profit $16,100

CCC’s Net Profit Margin is:

16.1%
23.0%
32.2%
$161,000

 

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Question 8 2 pts If a firm’s PE ratio was 22, you would know that:<br>
0 multiple_choice_question
If a firm’s PE ratio was 22, you would know that:<br>
If a firm’s PE ratio was 22, you would know that:
Profits over Earnings = 22
The firm will probably not have any trouble meeting its debt obligations this year
The firm’s stock price is expected to increase 22%
Investors are willing to pay 22 times the firm’s EPS for a share of the firm’s stock.

 

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Question 9 2 pts Which of the following ratios would a potential creditor be most interested in?<br>
0 multiple_choice_question
Which of the following ratios would a potential creditor be most interested in?<br>
Which of the following ratios would a potential creditor be most interested in?
Times Interest Earned
Economic Value Added (EVA)
Return on Equity (ROE)
Net Profit Margin

 

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Question 10 2 pts The Du Pont equation allows you to gain additional insight into a firm’s<br>
0 multiple_choice_question
The Du Pont equation allows you to gain additional insight into a firm’s<br>
The Du Pont equation allows you to gain additional insight into a firm’s
Liquidity
Sources of ROE
Sales potential
Sources of income
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