A company’s return on assets should be greater than its return on equity.

Within what values will 95.44 percent of sample means of this process fall
July 30, 2019
When an entity recognizes revenue before it has received cash for the sale, it records an increase
July 30, 2019

A company’s return on assets should be greater than its return on equity.

An increase in financial leverage generally results in a higher return on equity (ROE).

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True

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False

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A company’s return on assets should be greater than its return on equity.

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True

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False

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An optimal current ratio should be greater than 1.0.

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True

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False

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GoodTimes, Inc. has asset turnover of 0.5 times, a net profit margin of 10% and average total assets of $100, what is its net income (assuming no unusual items)?

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$50

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$500

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$5

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The answer cannot be determined with the information provided

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Common-size financial statements are constructed in order to:

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Adjust for inflation and risk

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Facilitate comparisons of different-sized companies

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To comply with SEC requirements

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All of the above

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A company builds a new plant and finances its construction by issuing stock. Which ratio is least likely to be affected, all else being equal?

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Current ratio

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Debt to equity ratio

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Debt to asset ratio

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Net fixed assets to total assets

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A company has net working capital of $0, current liabilities of $25 and total assets equal to $100. What is its current ratio?

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0.0

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1.0

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0.5

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4.0

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Analysis of a company’s financial statements: Below are simplified versions of the balance sheet and income statement for Toys by Tom, Inc. Use this information to answer question 9.

Sales in 2003 were $10,000. Therefore, the compounded average growth rate is:

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8.6%

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6.7%

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6.3%

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Not enough information available

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The cash cycle measures the days required to produce finished goods or delivered services.

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True

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False

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In general, an increase in a liability is a source of funds.

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True

False[removed]

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