HMGT 3311 Exam II Review Questions and Answers

HMGT 3311 Exam II Review
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1. Ratio Categories 1. Liquidity (L)-measures how well an organization is prepared to meet its short
term obligations
2. Profitability (P)-how profitable an organization is
3. Activity (efficiency) (A)-how efficient is an organization using its assets to produce
revenues
4. Capital structure (C)-how an organizations assets are financed and the ability to
take on new debt.

2. Current Ratio (L) CA/CL

3. Acid Test Ratio (L) (Cash + Marketable Assets)/CL

4. Days in A/R (L) (Net pt. A/R)/(Net pt. Rev. /365)

5. Quick Ratio (L) (Cash+Net A/R+Marketable Securities)/CL

6. Average Payment CL/[(Op. Exp - Dep.)/365]
Period (L)

7. Days Cash on (Cash+Marketable Securities+Board Designated Funds)/[(Operating Exp. - De-
Hand (L) preciation)/365]

8. Operating Mar- Operating Income/Operating Revenues
gin (P)

9. Return on Total Excess of Rev. over Exp. /(Net) Total Assets
(Net) Assets (P)

10. Non-Operating (Non-Operating Income + Other Income)/Total Operating Revenues
Revenue Ratio (P)

11. Total (Fixed) As- Total Operating Revenues/Total (Fixed) Assets
set Turnover Ra-
tio (A)
1/3