Fin 701 M2-1

An increase in which one of the following will increase a firms quick ratio without affecting its gas ratio?

Accounts receivable

Which one of these identifies the relationship between the return on assets and the return on equity?

Dupont Identity

Which one of the following accurately describes the three parts of the DuPont Identity?

Equity multiplier, profit margin, and total asset turnover.

If a company produces a return on assets of 14 percent and also a return on equity of 14 recent, then the firm:

Has an equity multiplier of 1.0

All of the following issues represent problems encountered when comparing the financial statements of two separate entities except the issue the companies:

Having the same fiscal year

The DuPont identity can be used to help managers answer which f the following questions related to a company's operations?

How many sales dollars are being generated per each dollar of assets? / How many dollars of assets have been acquired per each dollar in shareholders equity? / How much net profit is being generating per dollar sales?

The price-sales ratio is especially useful when analyzing firms that have:

Negative earnings

Which one of the following will decrease if a firm can decrease its operation cost, all else constant?

Price - earnings ratio

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

Profitability

A common-size income statement is an accounting statement that expresses all of a firms expenses as a percentage of:

Sales

Ratios that measure a firms liquidity are known as ________ Ratios.

Short term solvency

The sources and uses of cash over a stated period of time are reflected on the:

Statement of cash flows

On a common-size balance sheet all accounts for the current year are expressed as a percentage of:

Total assets for the current year

An increase in which of the following must increase the return on equity, all else constant?

Total assets turnover and debt equity ratio

RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both companies have similar operations. Based on this information, RJ's must be doing which one of the following?

Utilizing its total assets more efficiently than Sam's.