Fundamentals Of Corporate Finance, Tenth Standard Edition
10th Edition
ISBN: 9781121571938
Author: Westerfield, Jordan, 2013 Ross
Publisher: Mcgraw-Hill
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Textbook Question
Chapter 3, Problem 1CRCT
Current Ratio [LO2] What effect would the following actions have on a firm’s current ratio? Assume that net working capital is positive.
a. Inventory is purchased.
b. A supplier is paid.
c. A short-term bank loan is repaid.
d. A long-term debt is paid off early.
e. A customer pays off a credit account.
f. Inventory is sold at cost.
g. Inventory is sold for a profit.
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Which one of the following will decrease the net working capital of a firm? Assume the current ratio is greater than 1.0. A. selling inventory at cost
B. collecting payment from a customer
C. paying a payment on a long-term debt
D. selling a fixed asset for book value
E. paying a supplier for the purchase of an inventory item
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.
Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that
net working capital is positive.
a. Inventory is purchased.
b. A supplier is paid.
c. A short-term bank loan is repaid.
d. A long-term debt is paid off early.
e. A customer pays off a credit account.
f. Inventory is sold at cost.
g. Inventory is sold for a profit. LO 3.2
Chapter 3 Solutions
Fundamentals Of Corporate Finance, Tenth Standard Edition
Ch. 3.1 - Prob. 3.1ACQCh. 3.1 - Prob. 3.1BCQCh. 3.2 - Prob. 3.2ACQCh. 3.2 - Name two types of standardized statements and...Ch. 3.3 - What are the five groups of ratios? Give two or...Ch. 3.3 - Given the total debt ratio, what other two ratios...Ch. 3.3 - Turnover ratios all have one of two figures as the...Ch. 3.3 - Profitability ratios all have the same figure in...Ch. 3.4 - Return on assets, or ROA, can be expressed as the...Ch. 3.4 - Return on equity, or ROE, can be expressed as the...
Ch. 3.5 - Prob. 3.5ACQCh. 3.5 - Prob. 3.5BCQCh. 3.5 - Prob. 3.5CCQCh. 3.5 - Prob. 3.5DCQCh. 3 - Prob. 3.1CTFCh. 3 - Prob. 3.2CTFCh. 3 - What is the correct formula for computing the...Ch. 3 - Prob. 3.4CTFCh. 3 - Current Ratio [LO2] What effect would the...Ch. 3 - Current Ratio and Quick Ratio [LO2] In recent...Ch. 3 - Prob. 3CRCTCh. 3 - Prob. 4CRCTCh. 3 - Prob. 5CRCTCh. 3 - Prob. 6CRCTCh. 3 - Prob. 7CRCTCh. 3 - Prob. 8CRCTCh. 3 - Prob. 9CRCTCh. 3 - Industry-Specific Ratios [LO2] There are many ways...Ch. 3 - Prob. 11CRCTCh. 3 - Prob. 12CRCTCh. 3 - Prob. 1QPCh. 3 - Prob. 2QPCh. 3 - Prob. 3QPCh. 3 - Prob. 4QPCh. 3 - Prob. 5QPCh. 3 - Prob. 6QPCh. 3 - Prob. 7QPCh. 3 - Prob. 8QPCh. 3 - Prob. 9QPCh. 3 - Prob. 10QPCh. 3 - Prob. 11QPCh. 3 - Prob. 12QPCh. 3 - Prob. 13QPCh. 3 - Prob. 14QPCh. 3 - Prob. 15QPCh. 3 - Prob. 16QPCh. 3 - Prob. 17QPCh. 3 - Prob. 18QPCh. 3 - Prob. 19QPCh. 3 - Prob. 20QPCh. 3 - Prob. 21QPCh. 3 - Prob. 22QPCh. 3 - Prob. 23QPCh. 3 - Prob. 24QPCh. 3 - Prob. 25QPCh. 3 - Prob. 26QPCh. 3 - Prob. 27QPCh. 3 - Prob. 28QPCh. 3 - Prob. 29QPCh. 3 - Prob. 30QPCh. 3 - Prob. 1MCh. 3 - Prob. 2MCh. 3 - Prob. 3M
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- Which one of the following is a measure of long term solvency? A. Price earning ratio B. Profit margin C. Cash coverage ratio D. Receivables turnover E. Quick ratioarrow_forwardIf a firm decreases its operating costs, all else constant, then the: A. profit margin will decrease.B. return on assets will decrease.C. total asset turnover rate will increase.D. cash coverage ratio will decrease.E. price-earnings ratio will decrease Can you give me detailed explanation?arrow_forwardCurrent Ratio: Would the following events increase or decrease a firms ratio? a. Inventory sold? b. A firm takes out a bank loan to pay its suuppliers? c. The firm arranges a line of credit that allows it to borrow at any time to pay its suppliers?arrow_forward
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