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- The business risk of a company is most accurately measured by the company's: a. Debt-to-equity ratio b. Efficiency in using assets to generate sales c. Operating leverage and level of uncertainly about demand output prices and competitionWhich of the following statements are false? Select all that apply a. Liquidity ratios are used to measure the speed with which various accounts are converted into sales. b. When ratios of different years are being compared, inflation should be taken into consideration c. Return on total assets (ROA) is sometimes called return on investment d. Generally, inventory is concerned with the most liquid asset that a firm possesses. e. A P/E ratio of 20 indicates that investors are willing to pay $20 for each $1 of earnings.Which of the following statements is most correct?(a) A decline in the inventory turnover ratio suggests that the firm's liquidity position is improving.{b) The profit margin on sales is calculated by dividing net operating income by sales(c) When a corporation buys back its own stock, this is called Treasury Stock. The firm's cash and equity are both reduced.(d) None of the above.
- The ratio that indicates the how well management operates the business Select one a .Liquidity Ratios b. Financial Risk Ratio c .None of the options d.perating Performance RatioDescribe why an Investor would use Profitability Ratio’s? What are the following ratio's measuring (i) Return on Assets, (ii) Return on Equity, (iii) Profit Margin. Describe why a CEO would use Activity Ratio’s? What are the following ratio’s measuring (i) Days Receivables Outstanding, (ii) Inventory Turnover. Describe why a Bank would use Solvency Ratio’s? What are the following ratio’s measuring (i) Current Ratio, (ii) Acid-Test, (iii) Debt Ratio, (iv) Debt to Equity Ratio, Times Interest Earned ratioGive a comment on the financial health and performance of the company (as benchmarked with competitors) using the following liquidity ratios: current ratio recievable turnover inventory turnover quick ratio
- Which of the following assumptions is embodied in the AFN equation? a. All balance sheet accounts are tied directly to sales. b. Common stock and long-term debt are tied directly to sales. c. Last year's total assets were not optimal for last year's sales. d. Fixed assets, but not current assets, are tied directly to sales. e. Accounts payable and accruals are tied directly to sales.Which is wrong about the use of financial statement analysis? a. Seasonality factors may contribute to a sort of distortion on the financial ratio’s trends. b. Activity ratios, such as profit margin and return on asset, tells how efficient the company uses its resources and assets c. Horizontal analysis of financial statements is conducted by analyzing inter-period financial statements d. The Liquidity of the company can be determined using acid-test ratio and current ratioQualitative characteristics make accounting information useful for decision-making purposes. Identify the qualitative characteristic that is being adopted or not adopted for each of the following situations. You may copy and paste from this list: comparability predictive value consistency relevance confirmatory value timeliness faithful representation understandability materiality verifiability The quality of Walmart’s financial information helps its users to correct their prior expectations on share prices. Answer Walmart is the only company in its industry to depreciate its plant assets on a straight-line basis. Answer Walmart switches from first-in first-out (FIFO) to average-cost (AVCO) and then back to FIFO over a 2-year period. Answer Walmart does not issue its first-quarter report until…
- 60) Inadequacies of the existing system of financial ratio signify a need for a different approach to monitoring business performance. Of the following statements, which is NOT a shortcoming of financial ratio? a) financial measures are lagging indictors of business performance. b) Financial ratios have a short-term orientation and emphasize the cash flow rather than the processes that contribute to cash flow. c) Financial Ratio focus equally on the stockholder as on the customers, suppliers and employees. d) A and B e) A and B and CMatch (by letter) the following items with the description or example that best fits. Each letter is used only once.Terms_____ 1. Vertical analysis._____ 2. Horizontal analysis._____ 3. Liquidity._____ 4. Solvency._____ 5. Discontinued operations._____ 6. Quality of earnings._____ 7. Conservative accounting practices._____ 8. Aggressive accounting practices.Descriptionsa. A company’s ability to pay its current liabilities.b. Accounting choices that result in reporting lower income, lower assets, and higher liabilities.c. Accounting choices that result in reporting higher income, higher assets, and lower liabilities.d. The ability of reported earnings to reflect the company’s true earnings as well as the usefulness of reported earnings to help investors predict future earnings.e. A tool to analyze trends in financial statement data for a single company over time.f. The sale or disposal of a significant component of a company’s operations.g. A means to express each item in a financial…What does the inventory turnover period ratio measure? Select one: a.Profitability. b.The average time an organisation holds inventory. c.The liquidity of the firm. d.How much the firm's current assets could decrease and still leave it able to pay its current liabilities.