Quiz 4 answers

Topics: Financial ratios, Financial ratio, Balance sheet, Generally Accepted Accounting Principles, Revenue, Profit / Pages: 3 (454 words) / Published: Nov 18th, 2014
Question 1
2 / 2 pts
A firm with a Current Ratio of 2.0 is twice as profitable as a firm with a Current Ratio of 1.0. <br>
A firm with a Current Ratio of 2.0 is twice as profitable as a firm with a Current Ratio of 1.0. true false Question 2
2 / 2 pts
All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not.<br>
All other factors being equal, a company that uses debt financing will have a higher return on equity (ROE) ratio than one that does not. true false Question 3
2 / 2 pts
In general, firms want their Times Interest Earned ratio to be as low as possible.<br>
In general, firms want their Times Interest Earned ratio to be as low as possible. true false Question 4
2 / 2 pts
A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0.<br>
A company whose Total Asset Turnover ratio is 1.0 is using its assets more efficiently than one whose ratio is 2.0. true false Question 5
2 / 2 pts
If a firm's current ratio is less than 1.0, it indicates that:<br> The firm had negative net income for the year The firm will be unable to pay its short term loans which come due this year Current Assets are less than Current Liabilities The firm is insolvent Question 6
2 / 2 pts
A firm which has a relatively large amount of cash, accounts receivable, and inventory on its books and a relatively small amount of current liabilities would be considered:<br> liquid profitable risky nuts Question 7
2 / 2 pts
Skip to question text.
Refer to the following income statement for the Classic Cappuccino Corporation (CCC) to answer the question that follows:

Total Revenue $50,000
Operating Expenses 25,000
Depreciation 1,000
Operating Profit 24,000
Interest Expense 1,000
Before-Tax Profit 23,000
Taxes 6,900
After-Tax Profit $16,100
CCC’s Net Profit Margin is:

16.1% 23.0% 32.2% $161,000

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