Which of the following statements is correct? Statement 1. Asset utilization ratios describe how capital is being utilized to buy assets. Statement 2. Profitability ratios allow one to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital. Statement 3. Asset utilization ratios measure the returns on various assets such as return on total assets. A. Statement 1 only. B. Statement 2 only. C. Statement 3 only. D. All of the statements are correct. E. None of the statement is correct

Which of the following statements is correct? Statement 1. Asset utilization ratios describe how capital is being utilized to buy assets. Statement 2. Profitability ratios allow one to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital. Statement 3. Asset utilization ratios measure the returns on various assets such as return on total assets. A. Statement 1 only. B. Statement 2 only. C. Statement 3 only. D. All of the statements are correct. E. None of the statement is correct

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 12MCQ: Which of the following statements is true? a. The fixed asset turnover ratio assists managers in...

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Which of the following statements is true? a. The fixed asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b. The average age of the fixed assets is computed by dividing accumulated depreciation by depreciation expense. c. If net sales increases, the fixed asset turnover ratio will decrease. d. A relatively low fixed asset turnover ratio signals that a company is efficiently using its assets.
Which of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c. Sales Ă· Assets b. Assets Ă· Equity d. Net Income Ă· Net Sales
The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
Which of the following statements is NOT correct? Statement 1: Debt utilization ratios are used to evaluate the firm's debt position with regard to its asset base and earning power. Statement 2: The DuPont system of analysis emphasizes that profit generated by assets can be derived by various combinations of profit margins and asset turnover. Statement 3: Satisfactory return on assets may be achieved through high profit margins or rapid turnover of assets, but not a combination of both. A. Statement 1 only. B. Statement 2 only. C. Statement 3 only. D. All of the statements are NOT correct. E. All of the statements are correct.
Asset utilization ratios: A. Are most important to stockholders.B. Measures the company's ability to generate a profit on sales.C. Measure how much cash is available for reinvestment into current assets.D. Relate balance sheet assets to income statement sales.
_______ ratios are used to measure the speed in which various assets are converted into sales or cash. A Debt (aka Leverage) B Efficiency (aka working capital) C Profitability C Coverage
Return on Assets, or ROA, can be expressed as the product of two ratios. Which two? Select one: a. Sales Turnover and Total Asset Turnover b. None of the options are correct c. Net income and total assets d. Profit margin and Total Asset Turnover e. Net Profit Margin and Fixed Asset turnover
Which of the following is NOT correct regarding the rate of return on assets? a. The rate of return on assets measures management’s ability to productively employ all its resources. b. The rate of return on assets measures the return on all assets used regardless of how the assets are financed. c. The rate of return on assets is a measure of profitability. d. The rate of return on assets measures the return on the investment made by the owners of the entity. is B the correct answer?
see attached 1-3 and 1-5 to answer this Refer to the financial statements of Mixon Company in Exercises 1–3 and 1–5. Evaluate the effi- ciency and profitability of the company by computing the following: (a) net profit margin, (b) total asset turnover, and (c) return on total assets. Comment on these ratio results.
11, Dudley Bank has the following balance sheet and income statement. For Dudley Bank, calculate: Return on equity Return on assets Asset utilization Equity multiplier Profit margin Interest expense ratio Provision for loan loss ratio Noninterest expense ratio Tax ratio Overhead efficiency
See Image for Information Compute the following performance indices for both companies: Profit margin Asset turnover Return on Capital Employed (ROCE) Current ratio Debt equity ratio Compare and analyse the performance of the two companies computed in (1) above and explain what the board of Box Limited needs to do to achieve their objective . c. Which other non-financial measures can influence the decision of the board of Box Limited?
Based on the Massy Group, an investment holding company, answer the following questions. Provide a detail explanation and examples to the answers. Assess the company’s working capital position by analyzing its current assets and liabilities using common methods and measures and perform a comparison/difference to that of another company. Evaluate the efficiency of the company’s working capital management strategies, including inventory management, accounts receivable, and accounts payable and perform a comparison/difference to that of another company. Based on the assessment and evaluation above, provide ten recommendations for improving the company’s working capital management practices, providing examples for each one.