Common‐size financial statements represent all figures on the financial statements
The debt ratio is a measure of a firmʹs
Which of the following statements is true?
Which of the following financial ratios is the best measure of the operating effectiveness of a firmʹs management?
Smith Corporation has current assets of $11,400, inventories of $4,000, and a current ratio of 2.6. What is Smithʹs quick or acid test ratio?
Spinnit Limited has a debt ratio of .57, current liabilities of $14,000, and total assets of $70,000. What is the level of Spinnit Limitedʹs total liabilities?
Heavy Load, Inc. has sales of $3,450,000, total assets of $1,240,000, and total liabilities of $275,000, which consist strictly of notes payable. The firmʹs operating profit margin is 16.1%, and it pays a 10% rate of interest on its notes payable. How much is the firmʹs interest coverage ratio?
Corbin, Inc. had net income of $150,000 on sales of $5,000,000 during 2014. In addition, the firmʹs total assets were $2,500,000, and its capital structure is comprised of 40% debt and 60% equity. Assume the company has no preference shares. What was Corbinʹs return on equity in 2014?
Dew Point Demolitions, Inc. generated a 1.23 total asset turnover in its latest fiscal year on assets of $2,112,077. The firm has total liabilities of $950,997. The firmʹs net profit margin was 10.3%. What is Dew Pointʹs return on equity? Assume the company has no preference shares. Round to the nearest 0.1%.
Which of the following is a limitation related to the usage of ratios when reviewing a firmʹs performance?