The cash coverage ratio directly measures the ability of a firm’s revenues to meet which one of its following obligations?

  • payment of interest to a lender
Which one of the following statements is correct?
  • An increase in the depreciation expense will not affect the cash coverage ratio.

Over the past year, the quick ratio for a firm increased while the current ratio remained constant. Given this information, which one of the following must have occurred? Assume all ratios have positive values.

  • inventory decreased

A firm has an interval measure of 48. This means that the firm has sufficient liquid assets to do which one of the following?

  • cover its operating costs for the next 48 days

A supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?

  • cash
An increase in which one of the following will increase a firm’s quick ratio without affecting its cash ratio?
  • accounts receivable

An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values.

  • decrease in the quick ratio

A firm uses 2008 as the base year for its financial statements. The common-size, base-year statement for 2009 has an inventory value of 1.08. This is interpreted to mean that the 2009 inventory is equal to 108 percent of which one of the following?

  • 2008 inventory expressed as a percent of 2008 total assets

On a common-base year financial statement, accounts receivables will be expressed relative to which one of the following?

  • base-year accounts receivables
According to the Statement of Cash Flows, an increase in interest expense will ____ the cash flow from ____ activities.
  • decrease; operating

According to the Statement of Cash Flows, a decrease in accounts receivable will _____ the cash flow from _____ activities.

  • increase; operating
The U.S. government coding system that classifies a firm by the nature of its business operations is known as the:
  • Standard Industrial Classification code.
The formula which breaks down the return on equity into three component parts is referred to as which one of the following?
  • Du Point identity
Relationships determined from a firm’s financial information and used for comparison purposes are known as:
  • financial ratios.

Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a common point in time?

  • common-base year statement