Marshall Networks, Inc. has a total asset turnover of 2.5 and a net profit margin of 3.5%. The firm has a return on equity of 17.5%. Calculate Marshall's debt ratio.
A) 30%
B) 40%
C) 50%
D) 60%
The DuPont method decomposes return on equity into
A) return on assets and the debt ratio.
B) return on assets and the equity multiplier.
C) operating income and inventory turnover.
D) net profit margin and fixed asset turnover.
A firm's average collection period has decreased significantly from the previous year. Which of the following could possibly explain the results?
A) Customers are paying off their accounts quicker.
B) Customers are taking longer to pay for purchases.
C) The firm has a stricter collection policy.
D) Both A and C.
An increase in ________ will increase common equity.
A) paid in capital
B) retained earnings
C) dividends paid
D) both A and
Another name for the acid test ratio is the
A) current ratio.
B) quick ratio.
C) inventory turnover ratio.
D) average collection period.
Which of the following financial ratios is the best measure of the operating effectiveness of a firm's management?
A) Current ratio
B) Gross profit margin
C) Quick ratio
D) Return on investment
Which of the following is included in the denominator of the times-interest-earned ratio?
A) Lease payments
B) Principal payments
C) Interest expense
D) Gross profit
The quick ratio is a better measure of liquidity than the current ratio if the firm has current assets composed primarily of
A) cash.
B) inventory.
C) marketable securities.
D) accruals.
