Question 1

Select the ratio that each definition most properly satisfies.
a.Dividend yield ratio
b.Operating cash flow ratio
c.Debt-to-total assets ratio
d.Return on common equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
-An income statement measure of the ability of a company to make its interest payments.

Accepted Answer

The statement describes a company's ability to pay its interest expenses, which can be measured by the Times Interest Earned (TIE) ratio. This ratio measures a company's ability to meet its interest payments by comparing its income to its interest expenses. A higher TIE ratio indicates a company is better able to meet its interest obligations.

Question 2

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Current ratio

Accepted Answer

The current ratio is a measure of a company's ability to pay current liabilities, as it compares current assets to current liabilities.

Answer: E
 The current ratio can also indicate instant debt-paying ability, as it shows the company's ability to pay its short-term obligations with its current assets.

Note: Although the current ratio can provide some information about a company's profitability and financial structure, it is not the best ratio to use for those purposes.

Question 3

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Dividend payout ratio

Accepted Answer

The dividend payout ratio is a profitability ratio that measures the percentage of earnings paid out to shareholders as dividends.

Question 4

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Dividend yield ratio

Accepted Answer

An increase in the dividend yield ratio is generally considered to be better as it indicates a higher return on investment for shareholders.

Question 5

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Debt-to-equity ratio

Accepted Answer

The debt-to-equity ratio is a measure of a company's financial leverage, specifically its ability to meet its financial obligations in the long term. It is a solvency ratio, which means it measures a company's ability to pay off long-term debts and obligations.

Question 6

Select the ratio that each definition most properly satisfies.
a.Dividend yield ratio
b.Operating cash flow ratio
c.Debt-to-total assets ratio
d.Return on common equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
-The relationship between net sales and total assets.

Accepted Answer

The relationship between net sales and total assets is best measured by the asset turnover ratio, which shows how efficiently a company is using its assets to generate revenue.

Question 7

Select the ratio that each definition most properly satisfies.
a.Dividend yield ratio
b.Operating cash flow ratio
c.Debt-to-total assets ratio
d.Return on common equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
-A measure of a company's success in earning a return for the common stockholders.

Accepted Answer

The measure of a company's success in earning a return for the common stockholders is best represented by the return on common stockholders' equity ratio. This measures the profitability of a company in relation to the amount of equity invested by its stockholders.

Question 8

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.)
a.increase
b.decrease
-Times interest earned ratio

Accepted Answer

The times interest earned ratio is considered a solvency ratio because it measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Question 9

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.)
a.increase
b.decrease
-Current ratio

Accepted Answer

The current ratio is a measure of a company's ability to pay current liabilities, as it compares current assets to current liabilities.

Answer: E
 The current ratio can also indicate instant debt-paying ability, as it shows the company's ability to pay its short-term obligations with its current assets.

Note: Although the current ratio can provide some information about a company's profitability and financial structure, it is not the best ratio to use for those purposes.

Question 10

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Times interest earned ratio

Accepted Answer

The times interest earned ratio is considered a solvency ratio because it measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Question 11

Select the ratio that each definition most properly satisfies.
a.Dividend yield ratio
b.Operating cash flow ratio
c.Debt-to-total assets ratio
d.Return on common equity ratio
e.Times interest earned ratio
f.Asset turnover ratio
g.Debt-to-equity ratio
h.Dividend payout ratio
-The relationship between dividends and the market price of a company's stock.

Accepted Answer

The dividend yield ratio is the best measure for understanding the relationship between dividends and the market price of a company's stock, as it directly compares the dividend paid to the price of the stock.

Question 12

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Gross profit percentage

Accepted Answer

The answer of Indicate the type of each ratio listed....

Question 13

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.)
a.increase
b.decrease
-Asset turnover ratio

Accepted Answer

The asset turnover ratio is used to assess how effectively a company is using its assets to generate sales. It measures the amount of sales or revenues generated per dollar of assets.

Question 14

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Return on assets ratio

Accepted Answer

The return on assets ratio measures how efficiently a company is using its assets to generate profit. This is a profitability ratio, as it helps determine the company's ability to generate earnings.

Question 15

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.)
a.increase
b.decrease
-Dividend yield ratio

Accepted Answer

An increase in the dividend yield ratio is generally considered to be better as it indicates a higher return on investment for shareholders.

Question 16

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Net profit margin percentage

Accepted Answer

Net profit margin percentage measures how much profit a company earns for every revenue generated. Earnings per share is the measure of a company's profitability that calculates the amount of net income earned for each outstanding share of common stock.

Question 17

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.)
a.increase
b.decrease
-Debt-to-equity ratio

Accepted Answer

The debt-to-equity ratio is a measure of a company's financial leverage, specifically its ability to meet its financial obligations in the long term. It is a solvency ratio, which means it measures a company's ability to pay off long-term debts and obligations.

Question 18

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Earnings per share

Accepted Answer

Earnings per share is a profitability ratio that measures the amount of net income earned for each share of common stock outstanding.

Question 19

Indicate the type of each ratio listed. (Choices may be used more than once.)
a.Liquidity ratio
b.Debt management ratio
c.Asset efficiency ratio
d.Profitability ratio
e.Stockholder ratio
-Inventory turnover ratio

Accepted Answer

The inventory turnover ratio is considered a liquidity ratio because it measures how quickly a company can convert its inventory into cash or sales.

Question 20

Select the ratio that would include each amount or account in its calculation. (Choices may be used more than once.)
a.Times interest earned ratio
b.Operating cash flow ratio
c.Debt-to-equity ratio
d.Return on equity
-Income from operations

Accepted Answer

The answer of Select the ratio that would include each...

Quiz 12: Financial Statement Analysis

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Current ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Dividend payout ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Dividend yield ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Debt-to-equity ratio

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.) a.increase b.decrease -Times interest earned ratio

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.) a.increase b.decrease -Current ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Times interest earned ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Gross profit percentage

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.) a.increase b.decrease -Asset turnover ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Return on assets ratio

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.) a.increase b.decrease -Dividend yield ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Net profit margin percentage

For each ratio listed, select whether an increase or decrease in the ratio is generally considered to be better. (Choices may be used more than once.) a.increase b.decrease -Debt-to-equity ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Earnings per share

Indicate the type of each ratio listed. (Choices may be used more than once.) a.Liquidity ratio b.Debt management ratio c.Asset efficiency ratio d.Profitability ratio e.Stockholder ratio -Inventory turnover ratio

Select the ratio that would include each amount or account in its calculation. (Choices may be used more than once.) a.Times interest earned ratio b.Operating cash flow ratio c.Debt-to-equity ratio d.Return on equity -Income from operations