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Analysis Of Financial Statements
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Analysis Of Financial Statements
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25 Questions

1. Why are M/B and MVA highly correlated?

2. What do liquidity ratios measure?

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

4. Explain how financial ratio analysis helps financial managers assess the health of a company.

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

6. How do you calculate inventory turnover? (This is an Asset Activity Ratio)

7. How do you calculate P/E? (This is a Market Value Ratio)

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

9. How do you calculate gross profit margin? (This is a Profitability Ratio)

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

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

12. Why is the EVA an important new tool in financial analysis?

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

14. What is a financial ratio?

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

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

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

18. Malpaso Company has current assets of $50000. Total assets are $200000; and longterm liabilities and common stock collectively total $180000. What is the value of the current ratio?

19. How do you calculate net profit margin? (This is a Profitability Ratio)

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

21. What do asset activity ratios measure?

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

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

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

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

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