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Analysis Of Financial Statements
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Analysis Of Financial Statements
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25 Questions

1. The ___________________________measures how efficiently a firm utilizes its assets.

2. What do asset activity ratios measure?

3. Which ratios would a banker be most interested in when considering whether to approve an application for a short-term business loan? Explain.

4. If total assets are $20 million - noncurrent assets are $2 million - inventory is $3 million - and sales are $5 million for Toronto Brewing Company - what is the inventory turnover ratio?

5. ________ uses computed ratio values for several time periods and compares them.

6. Umbrella Company has total sales of $4 million. One-fourth of these are credit sales. The amount of accounts receivable is $100000. What is the average collection period for the company? Use a 365-day year.

7. What does the du pont system of ratio analysis examine?

8. How do you calculate the debt to total assets? (This is a Debt Ratio)

9. Under what circumstances would market to book value ratios be misleading? Explain.

10. The ___________________________tells us how efficiently the firm converts inventory to sales.

11. How do you calculate return on assets? (This is a Profitability Ratio)

12. How do you calculate the current ratio? (This is a Liquidity Ratio)

13. How do you calculate operating profit margin? (This is a Profitability Ratio)

14. The ___________________________is the percentage of debt relative to the amount of equity of the firm.

15. Umbrella Corporation has total assets of $5 million and an asset turnover ratio of 4. If net income is $2 million - What is the value of the net profit margin?

16. How do you calculate the modified du pont equation?

17. How do you calculate the debt to equity? (This is a Debt Ratio)

18. What is meant by the leverage effect?

19. How do you calculate total asset turnover? (This is an Asset Activity Ratio)

20. What is a financial ratio?

21. How do you calculate the du pont system of ratio analysis?

22. How do you calculate the average collection period? (This is an Asset Activity Ratio)

23. In the modified Du Pont equation - ROE is the product of net profit margin - total asset turnover - and the ________________________.

24. What is a mixed ratio?

25. Explain the difference between the current and the quick ratio.

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