ACCOUNTING 333 CHAPTER 3 PRACTICE QUIZ (ACCOUNTING333CHAPTER3PRACTICEQUIZ)

Chapter 3 Practice Quiz MBA 6130 1 ACCOUNTING 333 CHAPTER 3 PRACTICE QUIZ. 1. Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are often referred to as: o asset management ratios. o liquidity measures. o leverage ratios. o profitability ratios. o utilization ratios. 2. Which one of these measures a firm's long-run ability to meet its obligations? o Cash ratio o Total asset turnover o Quick ratio o Return on equity o Equity multiplier 3. Which ratio measures the number of times a firm lends money to customers, collects that money, and relends it within a year? o Total asset turnover o Days' sales in receivables o Total debt ratio o Receivables turnover o Quick ratio 4. Which ratio calculates the amount of sales generated by each $1 invested in assets? o Total asset turnover o Return on equity o Return on assets o Equity multiplier o DuPont identity 5. The return on equity can be calculated as: o Profit margin × 1/Capital intensity ratio × Equity multiplier. o Return on assets × b. o Profit margin × Total asset turnover × Debt-equity ratio o Profit margin × 1/Equity multiplier × (1 + Debt-equity ratio). o Return on assets × Debt-equity ratio 6. If a firm decreases its operating costs, all else constant, then: o the profit margin increases while the cash coverage ratio decreases. o the return on assets increases while the return on equity decreases.