Question 1

Indicate the type of each ratio listed. (Choices may be used more than once.)
-dividend yield ratio

Accepted Answer

The dividend yield ratio is a shareholder ratio because it measures the dividend income relative to the price of the stock, indicating the return on investment for shareholders.

Question 2

Select the ratio that each definition most properly satisfies.
-the relationship between net sales and total assets

Accepted Answer

The relationship between net sales and total assets is most properly satisfied by the asset turnover ratio. This ratio measures how efficiently a company uses its assets to generate sales, calculated by dividing net sales by total assets.

Question 3

Match these terms to their correct definition.
-compares a single corporation across time

Accepted Answer

The answer of Match these terms to their correct definition.
-compares...

Question 4

Indicate the type of each ratio listed. (Choices may be used more than once.)
-dividend payout ratio

Accepted Answer

The dividend payout ratio is a shareholder ratio because it measures the percentage of net income distributed to shareholders in the form of dividends.

Question 5

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.)
-dividend yield ratio

Accepted Answer

An increase in the dividend yield ratio is generally considered to be better because it indicates that a company is paying out more in dividends relative to its share price, which can be attractive to investors looking for income.

Question 6

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.)
-current ratio

Accepted Answer

An increase in the current ratio generally indicates better liquidity, meaning a company is more capable of paying off its short-term liabilities with its short-term assets.

Question 7

Select the ratio that each definition most properly satisfies.
-the relationship between dividends and the market price of a company's shares

Accepted Answer

The dividend yield ratio is the correct choice because it measures the relationship between the dividends paid to shareholders and the market price of the company's shares, showing how much a company pays out in dividends each year relative to its stock price.

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.)
-asset turnover ratio

Accepted Answer

An increase in the asset turnover ratio is generally considered to be better because it indicates that a company is generating more revenue per dollar of assets, which is a sign of operational efficiency.

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.)
-debt-to-equity ratio

Accepted Answer

A decrease in the debt-to-equity ratio is generally considered to be better because it indicates a company is using less debt relative to its equity, suggesting a stronger financial position and lower financial risk.

Question 10

Indicate the type of each ratio listed. (Choices may be used more than once.)
-net profit margin percentage

Accepted Answer

Net profit margin percentage is a profitability ratio, indicating how much profit a company makes with respect to its revenues.

Question 11

Indicate the type of each ratio listed. (Choices may be used more than once.)
-gross profit percentage

Accepted Answer

Gross profit percentage is a measure of a company's efficiency in converting sales into profit, making it a profitability ratio. It indicates how well a company uses its resources to make a profit before other expenses are deducted.

Question 12

Indicate the type of each ratio listed. (Choices may be used more than once.)
-earnings per share

Accepted Answer

Earnings per share (EPS) is a measure of the portion of a company's profit allocated to each outstanding share of common stock, making it a shareholder ratio.

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.)
-times interest earned ratio

Accepted Answer

An increase in the times interest earned ratio is generally considered to be better because it indicates a company has more earnings available to cover its interest expenses, suggesting stronger financial health.

Question 14

Indicate the type of each ratio listed. (Choices may be used more than once.)
-debt-to-equity ratio

Accepted Answer

The debt-to-equity ratio is a debt management ratio, indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Question 15

Select the ratio that each definition most properly satisfies.
-a measure of the ability of a company to finance current obligations from cash from operations

Accepted Answer

The operating cash flow ratio measures a company's ability to cover its short-term obligations with cash generated from its core business operations. This makes it the most appropriate choice for a measure of a company's ability to finance current obligations from cash from operations.

Question 16

Select the ratio that each definition most properly satisfies.
-an income statement measure of the ability of a company to make its interest payments

Accepted Answer

The times interest earned ratio, also known as the interest coverage ratio, measures a company's ability to meet its interest payments from its earnings before interest and taxes (EBIT). It is a direct indicator of a company's financial health in terms of its obligations to debt interest payments.

Question 17

Indicate the type of each ratio listed. (Choices may be used more than once.)
-inventory turnover ratio

Accepted Answer

The inventory turnover ratio is considered an asset efficiency ratio because it measures how effectively a company manages its assets, specifically inventory, to generate sales. It calculates how many times a company's inventory is sold and replaced over a period.

Question 18

Indicate the type of each ratio listed. (Choices may be used more than once.)
-return on assets ratio

Accepted Answer

The return on assets ratio is a profitability ratio because it measures how efficiently a company can manage its assets to produce net income.

Question 19

Indicate the type of each ratio listed. (Choices may be used more than once.)
-times interest earned ratio

Accepted Answer

The times interest earned ratio is a debt management ratio because it measures a company's ability to meet its debt obligations based on its current earnings.

Question 20

Select the ratio that each definition most properly satisfies.
-a measure of a company's success in earning a return for the common shareholders

Accepted Answer

The return on common equity (ROCE) ratio measures a company's profitability from the perspective of common shareholders, indicating how effectively a company uses the equity invested by its common shareholders to generate profits.

Quiz 13: Financial Statement Analysis

Indicate the type of each ratio listed. (Choices may be used more than once.) -dividend yield ratio

Select the ratio that each definition most properly satisfies. -the relationship between net sales and total assets

Match these terms to their correct definition. -compares a single corporation across time

Indicate the type of each ratio listed. (Choices may be used more than once.) -dividend payout 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.) -dividend yield 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.) -current ratio

Select the ratio that each definition most properly satisfies. -the relationship between dividends and the market price of a company's shares

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.) -asset turnover 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.) -debt-to-equity ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) -net profit margin percentage

Indicate the type of each ratio listed. (Choices may be used more than once.) -gross profit percentage

Indicate the type of each ratio listed. (Choices may be used more than once.) -earnings per share

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.) -times interest earned ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) -debt-to-equity ratio

Select the ratio that each definition most properly satisfies. -a measure of the ability of a company to finance current obligations from cash from operations

Select the ratio that each definition most properly satisfies. -an income statement measure of the ability of a company to make its interest payments

Indicate the type of each ratio listed. (Choices may be used more than once.) -inventory turnover ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) -return on assets ratio

Indicate the type of each ratio listed. (Choices may be used more than once.) -times interest earned ratio

Select the ratio that each definition most properly satisfies. -a measure of a company's success in earning a return for the common shareholders