31.Asset turnover is a measure of
a.efficiency
b.effectiveness
c.profitability
d.the ability of the company to generate income from sales
32.Deere Company and Red Fox Co. are similar in size and in many other respects. The companies reported the following net cash flow from (used for) investing activities in its recent annual reports:
($ in millions)200920082007
Deere Company40478(30)
Red Fox Co.(257)(294)(80)
From this information, which of the following is TRUE
a.Deere Company appears to be growing more rapidly than Red Fox Co.
b.Red Fox Co. appears to be growing more rapidly than Deere Company
c.Deere Company has better investment alternatives than Red Fox Co.
d.Red Fox Co. is less profitable than Deere Company
Figure 11-1
Petal Co.Reel Co.Sphere Co.Shade Co.
Sales (in millions)$1,000$2,000$2,000$600
Profit margin0.150.050.090.20
Asset turnover1.251.501.151.10
33.Refer to the information in Figure 11-1. Which company has the most profit?
a.Petal Co.
b.Reel Co.
c.Sphere Co.
d.Shade Co.
34.Refer to the information in Figure 11-1. Which company is most effective?
a.Petal Co.
b.Reel Co.
c.Sphere Co.
d.Shade Co.
35.Refer to the information in Figure 11-1. Which company has the most total assets?
a.Petal Co.
b.Reel Co.
c.Sphere Co.
d.Shade Co.
36.Refer to the information in Figure 11-1. Which company is most efficient?
a.Petal Co.
b.Reel Co.
c.Sphere Co.
d.Shade Co.
37.Generally, a company is experiencing a lack of investment opportunities when it has
a.capital expenditures during a period
b.straight-line depreciation during a period
c.straight-line depreciation in excess of capital expenditures during a period
d.capital expenditures in excess of straight-line depreciation during a period
38.Investment decisions affect profit in which of the following ways?
a.the amount invested in plant assets (like equipment), will affect the amount of depreciation expense reported on the income statement
b.the amount spent on acquiring inventory to sell will affect the amount of cost of goods sold expense on the income statement
c.the amount of dividends distributed to stockholders will reduce the retained earnings
d.investment decisions have no effect on profits
39.Which of the following measures the effectiveness of a company in utilizing its assets to sell its products?
a.asset turnover
b.operating leverage
c.return on assets
d.profit margin
40.If an investor concludes that one company is more efficient in generating profits than another company, that investor is looking at which of the following measures?
a.return on assets
b.profit margin
c.asset turnover
d.operating leverage