Question 1

Average payment period measures

Accepted Answer

A)  The number of days an organization can meet its current expenses with it existing cash and marketable securities 
B)  How quickly short-term liabilities are paid 
C)  The time lag between production of a good or service and receipt of payment for this work 
D)  The ability to meet short-term obligations with current assets 
A)  The number of days an organization can meet its current expenses with it existing cash and marketable securities 
B)  How quickly short-term liabilities are paid 
C)  The time lag between production of a good or service and receipt of payment for this work 
D)  The ability to meet short-term obligations with current assets B

Question 2

Which of the following would indicate a reduced ability to meet short-term obligations?

Accepted Answer

A)  An increase in the current ratio 
B)  A reduction in days in accounts receivable 
C)  An increase in average payment period 
D)  An increase in days cash on hand 
A)  An increase in the current ratio 
B)  A reduction in days in accounts receivable 
C)  An increase in average payment period 
D)  An increase in days cash on hand C

Question 3

Functional benchmarking identifies industry leaders to establish performance targets.

Accepted Answer

A) True 
 B)False  False

Question 4

The capital structure ratio that measures ________ shows the proportion of total assets financed by the owners of the organization.

Accepted Answer

A)  Long-term debt to equity 
B)  Equity financing ratio 
C)  Times interest earned 
D)  Debt coverage 
E)  Capital expense 
A)  Long-term debt to equity 
B)  Equity financing ratio 
C)  Times interest earned 
D)  Debt coverage 
E)  Capital expense

Question 5

Profit indicators identify the level of profit earned in inpatient and outpatient areas.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following indicates an improvement in an organization's capital structure?

Accepted Answer

A)  A decrease in the equity financing ratio 
B)  A decrease in debt service coverage 
C)  A decrease in capital expense 
D)  A decrease in times interest earned 
E)  A decrease in total asset turnover 
A)  A decrease in the equity financing ratio 
B)  A decrease in debt service coverage 
C)  A decrease in capital expense 
D)  A decrease in times interest earned 
E)  A decrease in total asset turnover

Question 7

The purpose of accounting ratios is to

Accepted Answer

A)  Assess financial performance by relating one financial variable to another 
B)  Compare the performance of one organization to that of other organizations 
C)  Drill down into operations to identify the reason for poor financial performance 
D)  Determine why actual performance does not match the budget 
A)  Assess financial performance by relating one financial variable to another 
B)  Compare the performance of one organization to that of other organizations 
C)  Drill down into operations to identify the reason for poor financial performance 
D)  Determine why actual performance does not match the budget

Question 8

Profitability ratios examine how much money is earned from operations based on invested equity, assets employed, and sales.

Accepted Answer

A) True 
 B)False

Question 9

The category of ratios that assesses the ability to meet short-term obligation is

Accepted Answer

A)  Profitability 
B)  Liquidity 
C)  Capital structure 
D)  Turnover 
A)  Profitability 
B)  Liquidity 
C)  Capital structure 
D)  Turnover

Question 10

The DuPont Analysis formula is

Accepted Answer

A)  Total margin * Total asset turnover * Equity multiplier 
B)  Operating margin * Total asset turnover * Long-term debt to equity 
C)  Operating margin * Fixed asset turnover * Equity multiplier 
D)  Total margin * Fixed asset turnover * Long-term debt to equity 
E)  Total margin * Current asset turnover * Equity multiplier 
A)  Total margin * Total asset turnover * Equity multiplier 
B)  Operating margin * Total asset turnover * Long-term debt to equity 
C)  Operating margin * Fixed asset turnover * Equity multiplier 
D)  Total margin * Fixed asset turnover * Long-term debt to equity 
E)  Total margin * Current asset turnover * Equity multiplier

Question 11

The formula for debt service coverage is

Accepted Answer

A)  (Profit + Depreciation)/(Current liabilities + Long-term debt) 
B)  (Profit (Loss) + Interest expense + Depreciation)/(Interest expense + Principal) 
C)  (Interest expense + Depreciation + Amortization)/Total expense 
D)  Long-term debt/Equity 
E)  Equity/Total assets 
A)  (Profit + Depreciation)/(Current liabilities + Long-term debt) 
B)  (Profit (Loss) + Interest expense + Depreciation)/(Interest expense + Principal) 
C)  (Interest expense + Depreciation + Amortization)/Total expense 
D)  Long-term debt/Equity 
E)  Equity/Total assets

Question 12

Turnover ratios assess the overall effectiveness of management.

Accepted Answer

A) True 
 B)False

Question 13

Turnover ratio

Accepted Answer

A)  Measures the ability of management to generate more revenues than expenses 
B)  Measures the productivity of assets 
C)  Measures the ability of the organization to meet its short-term financial obligations 
D)  Measures how assets are financed and the ability of the organization to meet all its financial obligations 
A)  Measures the ability of management to generate more revenues than expenses 
B)  Measures the productivity of assets 
C)  Measures the ability of the organization to meet its short-term financial obligations 
D)  Measures how assets are financed and the ability of the organization to meet all its financial obligations

Question 14

The formula for return on assets is

Accepted Answer

A)  Profit/Equity 
B)  Profit/Total assets 
C)  Profit/Total revenue 
D)  Net operating income/Net operating revenue 
A)  Profit/Equity 
B)  Profit/Total assets 
C)  Profit/Total revenue 
D)  Net operating income/Net operating revenue

Question 15

When assessing the profitability ratios of an organization's ratios, which of the following should be considered?

Accepted Answer

A)  Assets employed, size of organization 
B)  Type of organization 
C)  Historical returns 
D)  Should earn 
E)  All of the above 
A)  Assets employed, size of organization 
B)  Type of organization 
C)  Historical returns 
D)  Should earn 
E)  All of the above

Question 16

Debt service coverage measures

Accepted Answer

A)  The proportion of total assets financed by the owners of the organization 
B)  How much of total expense the organization devotes to using funds 
C)  The ability of the organization to meet its an annual interest payments 
D)  The ability of the organization to meet its annual interest and principle payments 
E)  The percentage of assets permanently financed by debt and ignores short-term liabilities 
A)  The proportion of total assets financed by the owners of the organization 
B)  How much of total expense the organization devotes to using funds 
C)  The ability of the organization to meet its an annual interest payments 
D)  The ability of the organization to meet its annual interest and principle payments 
E)  The percentage of assets permanently financed by debt and ignores short-term liabilities

Question 17

The formula for the acid ratio is

Accepted Answer

A)  Current assets/Current liabilities 
B)  (Cash + Marketable securities + Accounts receivable)/Current liabilities 
C)  (Cash + Marketable securities)/((Annual expenses - Depreciation)/365) 
D)  Accounts receivable/(Operating revenue/365) 
E)  Current liabilities/((Annual expense - Depreciation)/365) 
A)  Current assets/Current liabilities 
B)  (Cash + Marketable securities + Accounts receivable)/Current liabilities 
C)  (Cash + Marketable securities)/((Annual expenses - Depreciation)/365) 
D)  Accounts receivable/(Operating revenue/365) 
E)  Current liabilities/((Annual expense - Depreciation)/365)

Question 18

The formula for days in accounts receivable are

Accepted Answer

A)  Current assets/Current liabilities 
B)  (Cash + Marketable securities + Accounts receivable)/Current liabilities 
C)  (Cash + Marketable securities)/((Annual expenses - Depreciation)/365) 
D)  Accounts receivable/(Operating revenue/365) 
E)  Current liabilities/((Annual expense - Depreciation)/365) 
A)  Current assets/Current liabilities 
B)  (Cash + Marketable securities + Accounts receivable)/Current liabilities 
C)  (Cash + Marketable securities)/((Annual expenses - Depreciation)/365) 
D)  Accounts receivable/(Operating revenue/365) 
E)  Current liabilities/((Annual expense - Depreciation)/365)

Question 19

Efficiency indicators examine the productivity of labor.

Accepted Answer

A) True 
 B)False

Question 20

The form of benchmarking that seeks to meet or exceed the performance of organizations pursuing the same customers is

Accepted Answer

A)  Internal or historical 
B)  Industry average or best-in-class performance` 
C)  Competitive 
D)  Functional 
A)  Internal or historical 
B)  Industry average or best-in-class performance` 
C)  Competitive 
D)  Functional

Average payment period measures

Which of the following would indicate a reduced ability to meet short-term obligations?

Functional benchmarking identifies industry leaders to establish performance targets.

The capital structure ratio that measures ________ shows the proportion of total assets financed by the owners of the organization.

Profit indicators identify the level of profit earned in inpatient and outpatient areas.

Which of the following indicates an improvement in an organization's capital structure?

The purpose of accounting ratios is to

Profitability ratios examine how much money is earned from operations based on invested equity, assets employed, and sales.

The category of ratios that assesses the ability to meet short-term obligation is

The DuPont Analysis formula is

The formula for debt service coverage is

Turnover ratios assess the overall effectiveness of management.

Turnover ratio

The formula for return on assets is

When assessing the profitability ratios of an organization's ratios, which of the following should be considered?

Debt service coverage measures

The formula for the acid ratio is

The formula for days in accounts receivable are

Efficiency indicators examine the productivity of labor.

The form of benchmarking that seeks to meet or exceed the performance of organizations pursuing the same customers is

Financial Planning and Management

Accounting and Economics

Budget Incentives and Strategies

Output Forecasts and Revenue Budgets

Scratch Budgeting

Incremental Budgeting

Flexible Budgeting

Zero-Base Budgeting

Program Budgeting

Activity-Based Budgeting

Variance Analysis

Capital Budgeting

Cost-Benefit Analysis, Cost-Effectiveness Analysis, and Program Evaluation

Financial Functions in Finance

Strategic Financial Planning

Financial Management and Health Care

Filters

Exam 12: Ratio Analysis and Operating Indicators

Average payment period measures

Which of the following would indicate a reduced ability to meet short-term obligations?

Functional benchmarking identifies industry leaders to establish performance targets.

The capital structure ratio that measures ________ shows the proportion of total assets financed by the owners of the organization.

Profit indicators identify the level of profit earned in inpatient and outpatient areas.

Which of the following indicates an improvement in an organization's capital structure?

The purpose of accounting ratios is to

Profitability ratios examine how much money is earned from operations based on invested equity, assets employed, and sales.

The category of ratios that assesses the ability to meet short-term obligation is

The DuPont Analysis formula is

The formula for debt service coverage is

Turnover ratios assess the overall effectiveness of management.

Turnover ratio

The formula for return on assets is

When assessing the profitability ratios of an organization's ratios, which of the following should be considered?

Debt service coverage measures

The formula for the acid ratio is

The formula for days in accounts receivable are

Efficiency indicators examine the productivity of labor.

The form of benchmarking that seeks to meet or exceed the performance of organizations pursuing the same customers is

Financial Planning and Management

Accounting and Economics

Budget Incentives and Strategies

Output Forecasts and Revenue Budgets

Scratch Budgeting

Incremental Budgeting

Flexible Budgeting

Zero-Base Budgeting

Program Budgeting

Activity-Based Budgeting

Variance Analysis

Capital Budgeting

Cost-Benefit Analysis, Cost-Effectiveness Analysis, and Program Evaluation

Financial Functions in Finance

Strategic Financial Planning

Financial Management and Health Care

Filters