Exam 13: Measuring and Evaluating Financial Performance

A company has a current ratio of 2.0 and a quick ratio of 1.5.Assume the company then paid previously declared dividends in the amount of $20,000.Which of the following statements is true?

Benchmarks are required to evaluate a company's performance.Benchmarks are necessary when interpreting a company's financial ratios.These benchmarks may be the company's own results for prior years,the results of competitors,or an average for the industry.

Liquidity measures the ability of a company to meet its current financial obligations.Liquidity relates to a company's ability to survive in the short term by converting assets to cash that can be used to pay current liabilities as they come due.Ratios used to measure liquidity include the receivable turnover,the inventory turnover,the current ratio,and the quick ratio.

If an analyst wants to examine a company's short-run ability to survive,which of the following would best be considered?

A company has a current ratio of 2.0 and a quick ratio of 1.4.If the company then collects an accounts receivable,which of the following is a true statement?

Which of the following statements regarding liquidity and solvency ratios is true?

Which of the following ratios is calculated by dividing liquid assets by current liabilities?

The higher the times interest earned ratio,the greater the risk of nonpayment of interest.The higher the times interest earned ratio,the better able the company is to meet its interest obligations.

Which of the following ratios is a solvency ratio?

The debt-to-assets ratio is the:

The ratio that measures how many times a company replenishes its inventory in a year is the:

Cost of goods sold divided by average inventory is the calculation for which of the following ratios?

Which of the following is a liquidity ratio?

The following information is available for a company for the current year: Use the information above to answer the following question.Which of the following is closest to the fixed asset turnover ratio?

A company has a debt to assets ratio of 0.45.If the company then borrows cash from the bank to finance a building acquisition,which of the following is a true statement?

Which of the following ratios is calculated by dividing current assets by current liabilities?

A company's comparative balance sheet show total assets for 2015 and 2014 as $990,000 and $900,000,respectively.What is the percentage change to be reported in the horizontal analysis?

Which of the following measures would assist in assessing the solvency of a company?

Which of the following is calculated by dividing net income by average total stockholders' equity?

The ratio that measures the company's ability to meet required interest payments is the: