1. Question: The _______________ is used to indicate the relative protection of bondholders and to assess the probability of a firm's failing to meet required interest payments.

    A
    Interest Coverage Ratio

    B
    Gross Margin

    C
    Net Income

    D
    Asset Turnover

    Note: Answer not sure
    1. Report
  2. Question: The _______________is supposed to indicate the ability of the firm to meet its current obligations.

    A
    Quick Ratio

    B
    Debt Equity Ratio

    C
    Retained Earnings

    D
    Current Ratio

    Note: Answer not sure
    1. Report
  3. Question: Which of the following is NOT a current liability?

    A
    Mortgage Payable

    B
    Accounts Payable

    C
    Salaries Payable

    D
    Taxes Payable

    Note: Answer not sure
    1. Report
  4. Question: XYZ Company reports total assets and total liabilities of $425,000 and $200,000, respectively, at the conclusion of its first year of business. The company earned $95,000 during the first year and distributed $50,000 in dividends. What was the firm's contributed capital?

    A
    $225,000

    B
    $180,000

    C
    $130,000

    D
    $65,000

    Note: Answer not sure
    1. Report
  5. Question: In computing the rate of return on assets, interest expense net of income tax savings is added to net income. Assume that XYZ Company has interest expense of $20 million and net income of $50 million. Assume that the income tax rate is 40 percent. In computing the rate of return on assets, what would the numerator be?

    A
    $38 million

    B
    $42 million

    C
    $58 million

    D
    $62 million

    Note: Answer not sure
    1. Report
  6. Question: Which of the following would NOT be used to evaluate a firm's operating cycle?

    A
    Accounts Payable Turnover Ratio

    B
    Inventory Turnover Ratio

    C
    Current Ratio

    D
    Accounts Receivable Turnover Ratio

    Note: Answer not sure
    1. Report
  7. Question: The _____________ states that if bond indentures require periodic repayments of principal on long-term liabilities, the denominator of the interest coverage ratio might include such repayments.

    A
    Debt Equity Ratio

    B
    Asset Turnover Ratio

    C
    Accounts Receivable Turnover

    D
    Fixed Charges Coverage Ratio

    Note: Answer not sure
    1. Report
  8. Question: Assume that the current ratio of XYZ Company is 2.5:1. What effect would an equal dollar increase in current assets and current liabilities have on the current ratio?

    A
    It would increase the current ratio.

    B
    It would decrease the current ratio.

    C
    It would have no effect on the current ratio.

    D
    The answer cannot be determined from the information given.

    Note: Answer not sure
    1. Report
  9. Question: Which of the following is NOT used to assess short-term liquidity risk?

    A
    Accounts Receivable Turnover

    B
    Operating Cash Flow to Current Liabilities Ratio

    C
    Current Ratio

    D
    Quick Ratio

    Note: Answer not sure
    1. Report
  10. Question: Assume that the debt-equity ratio of XYZ Company is .5 to 1. If the company issued a long-term note in the purchase of some land, what effect would this transaction have on the debt-equity ratio?

    A
    It would decrease the debt-equity ratio.

    B
    It would increase the debt-equity ratio.

    C
    It would have no effect on the debt-equity ratio.

    D
    The answer cannot be determined from the information given.

    Note: Answer not sure
    1. Report
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