Financial Accounting
9th Edition
ISBN: 9781259222139
Author: Robert Libby, Patricia Libby, Frank Hodge Ch
Publisher: McGraw-Hill Education
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Chapter 13, Problem 4MCQ
To determine
Identify the correct option which indicates the positive financial leverage percentage.
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7. A measure of the Company's long term debt paying ability is
Select one:
a. Dividend payout
b. time interest earned
c. Return on assets
d. Length of the operating cycle
Liquidity ratios measure the ability of the firm to meet debt obligations that come due beyond one year. True or False
Which of the following statements is true?
O A. Profit margin is calculated by dividing total assets by sales.
B. Return on Equity rises if equity increases and net income remain constant.
C. A 10% increase in cash will lead to a greater Cash Ratio
O D. The current ratio increases if the current liabilities increase
Chapter 13 Solutions
Financial Accounting
Ch. 13 - Who are the primary users of financial statements?Ch. 13 - When considering an investment in stock, investors...Ch. 13 - How does product differentiation differ from cost...Ch. 13 - What are the two general methods for making...Ch. 13 - What are component percentages? Why are they...Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What do profitability ratios focus on? What is an...Ch. 13 - What do turnover ratios focus on? What is an...Ch. 13 - What do liquidity ratios focus on? What is an...Ch. 13 - What do solvency ratios focus on? What is an...
Ch. 13 - What do market ratios focus on? What is an example...Ch. 13 - Prob. 12QCh. 13 - Explain why rapid growth in total sales might not...Ch. 13 - A company has total assets of 500,000 and...Ch. 13 - Prob. 2MCQCh. 13 - Prob. 3MCQCh. 13 - Prob. 4MCQCh. 13 - Prob. 5MCQCh. 13 - Prob. 6MCQCh. 13 - Prob. 7MCQCh. 13 - Prob. 8MCQCh. 13 - Prob. 9MCQCh. 13 - Prob. 10MCQCh. 13 - Prob. 13.1MECh. 13 - Prob. 13.2MECh. 13 - Prob. 13.3MECh. 13 - Computing the Financial Leverage Percentage...Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Prob. 13.6MECh. 13 - Prob. 13.7MECh. 13 - Prob. 13.8MECh. 13 - Prob. 13.9MECh. 13 - Prob. 13.10MECh. 13 - Using Financial Information to Identify Companies...Ch. 13 - Prob. 13.2ECh. 13 - Prob. 13.3ECh. 13 - Prob. 13.4ECh. 13 - Prob. 13.5ECh. 13 - Prob. 13.6ECh. 13 - Prob. 13.7ECh. 13 - Prob. 13.8ECh. 13 - Prob. 13.9ECh. 13 - Prob. 13.10ECh. 13 - Inferring Financial Information from Ratios E13-11...Ch. 13 - Prob. 13.12ECh. 13 - Prob. 13.13ECh. 13 - Prob. 13.1PCh. 13 - Prob. 13.2PCh. 13 - Prob. 13.3PCh. 13 - Prob. 13.4PCh. 13 - Prob. 13.5PCh. 13 - Computing Comparative Financial Statements and...Ch. 13 - Analyzing Financial Statements Using Ratios Use...Ch. 13 - Prob. 13.8PCh. 13 - Prob. 13.9PCh. 13 - Prob. 13.1APCh. 13 - Prob. 13.2APCh. 13 - Calculating Profitability, Turnover, Liquidity,...Ch. 13 - Prob. 13.4APCh. 13 - Prob. 13.5APCh. 13 - Prob. 13.6APCh. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Comparing Companies within an Industry Refer to...Ch. 13 - Prob. 13.4CPCh. 13 - Inferring Information from the DuPont Model Ratios...Ch. 13 - Prob. 13.6CP
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- Profitability Ratios: a. Measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. b. Measure the ability of the company to survive over a long period of time. c. Measure the income or operating success of a company for a given period of time.arrow_forwardI need help figuring: G. operating profit margin H. Long-term debt ratio (use end of year balance sheet figure) I. Total debt ratio (use end of your balance sheet figures) J. Times interest earn K. Cash coverage ratio L. Current ratio (use end of your balance sheet figures) M. Quick ratio (use end of your balance sheet figures)arrow_forwardWhich of the following are determining EFN when% of sales approach is applied normally based on growth rate? 1. Increase in tot assets 2. New Borrowing 3. Taxes Payable 4. Addition to RE A. 1 only B. 1&2 C. 1,2 & 3 D. 1,2 & 4 E. 1,2,3 & 4arrow_forward
- 13. A short-term creditor would be interested in A. profitability ratio. B. efficiency ratio. C. liquidity ratio. D. leverage ratio. The quick ratio of a firm would be unaffected by which of the following? 14. A. Land held for investment is sold for cash. B. Equipment is purchased, financed by a long-term debt issue. C. Inventories are sold for cash D. Inventories are sold on a credit basis.arrow_forwardLong-term solvency is indicated by a. Current ratio b. Debt/equity ratio c. Operating ratio d. Net profit ratioarrow_forwardSelected financial data for Bahama Bay and Caribbean Key are as follows:Required:1. Calculate the debt to equity ratio for Bahama Bay and Caribbean Key for the most recent year. Which company has the higher ratio?2. Calculate the return on assets for Bahama Bay and Caribbean Key. Which company appears more profitable?3. Calculate the times interest earned ratio for Bahama Bay and Caribbean Key. Which company is better able to meet interest payments as they become due?arrow_forward
- Which of the following statements are not true Select one: a. Profitability Index is a discounted technique b. Capitalisation are the total securities issued by a company c. Cash flows occurs over a series of years in capital budgeting decisions d. Some investment decisions are irreversible e. Borrowing is cheap compared to equityarrow_forwardNet working capital is defined as (select one): A. current assets minus current liabilities. B. a ratio measure of liquidity best used in cross-sectional analysis. C. current liabilities minus current assets. D. the portion of the firm's assets financed with short-term funds.arrow_forwardCalculate for each year (i) Return on capital employed(ii) Net profit margin(iii) Total Payable daysarrow_forward
- 1- Calulate the following liquidity ratio: a. Current Ratio b. Quick Ratio 2-Calulate the following asset management ratios a. Average collection period b. Inventory Turnover c. Fixed-asset turnover d. Total asset turnover 3. Calculate the following financial leverage management ratios: a. debt ratio b. Debt-to-equity ratio c. Times interest earned ratio d. Fixed-charge coverage ratio 4. Calculate the following profitablity leverage management ratios a. Gross profit margin b. Net profit margin c. Return on investment d. Return on Stockholders' equity 5. Calculate the following market-based ratios: a. Price-to-earnings ratio b. Market price-to-book value ratioarrow_forwardg. operating profit margin h. long -term debt ratio i. total debt ratioarrow_forwardThe current ratio: a. Is used to help assess a company's ability to pay its debts in the near future. b. Measures the effect of operating income on profit. c. Is used to measure the relationship between assets and long-term debt. d. Is used to measure a company's collection period.arrow_forward
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