Chapter 11, Problem 7DQ

Which statement is true about credits?      Credits always increase the net worth of a company.     Credits always indicate a detriment to the company.     Credits always indicate a benefit to the company.     None of the above statements are true.

Questions: Does a low return on sales indicate a weak company? (Y/N). Explain your answer. Do greater Net sales always result in greater net income? (Y/N) Why? Examine the financial information above and comment on the item that you find interesting.

If markets are truly efficient, does it matter whether firms engage in earnings management? On the other hand, if firms manage earnings, what does that say about management’s view on efficient markets?

Which of the following statements is usually correct? A low receivables turnover is good for the business The lower the total debt-to-equity ratio, the lower the financial risk for a firm The higher the tax rate for a firm, the lower the interest coverage ratio An increase in net profit margin with no change in sales or assets means a poor ROI

Why is the profit maximization supposed not the most important goal of the company?

A company cannot be increasing its market share if its net sales are declining

How important is profit? How can a company survive when it isn't making a profit? How can a company fail when it is making a large profit?

If the company equity ratio dropped what does that mean?

How does current ratio and quick ratio relate to a firm's financial profitability? What should the %s look like for profitable or unprofitable firm