81. Two ratios that provide insight on the relationship between credit sales and receivables are:
A. Current ratio and inventory turnover ratio.
B. Accounts receivable turnover and current ratio.
C. Average days to collect receivables and asset turnover.
D. Accounts receivable turnover and average days to collect receivables.
82. Cost of goods sold/average inventory is the formula for which of these analytical measures?
A. Inventory turnover
B. Number of days’ sales in inventory
C. Return on investment
D. Debt to assets ratio
83. Which ratios measure a company's long-term debt paying ability and its financing structure?
A. Profitability
B. Solvency
C. Liquidity
D. None of these answer choices are correct.
84. Assume that you are considering purchasing some of a company's long-term bonds as an investment. Which of the company's financial statement ratios would you probably be most interested in?
A. Debt to assets ratio
B. Debt to equity
C. Plant assets to long-term liabilities
D. All of these answer choices are correct.
85. Steger Corporation has current assets of $450,000, total current liabilities of $350,000, net credit sales of $1,350,000, beginning accounts receivable of $165,000 and ending accounts receivable of $135,000. What is Steger’s accounts receivable turnover?
A. 8.2
B. 10.0
C. 9.0
D. 2.7
86. Earnings before interest and taxes divided by interest expense is the formula for which of these analytical measures?
A. Number of times interest is earned
B. Earnings per share
C. Return on investment
D. Debt to assets ratio
87. Net income divided by sales is the formula for which of these analytical measures?
A. Earnings per share
B. Return on equity
C. Net margin
D. Return on assets
88. If the company purchased a $50,000 piece of equipment by paying $20,000 and having the rest financed with a short-term note from the bank, then immediately after this transaction what is the expected impact on the current ratio?
D. Current assets decrease and current liabilities increase by the same amount therefore, the current ratio decreases.
89. Which ratio measures how effectively a company is using assets to generate revenue?
A. Net margin
B. Plant assets to long-term liabilities
C. Asset turnover
D. Inventory turnover
90. Which ratio measures the percentage of company’s assets that are financed by debt?
A. Debt to assets ratio
B. Asset turnover ratio
C. Debt to equity ratio
D. Return on investment