Question

1- which one of the following is not included in net working capital?

A) account receivable , B) retained earnings, C) cash and cash equivalent , D) prepaid expenses, E) Account payable.

2- Depreciation does which one of the following for a profitable firm?

A) has no effect on net income, B) decrease net working capital, C) decrease net income, D) increase net income, E) increase taxes

3- a firm has a current ratio 0.9, given this you know for certain that the firm.

A) has more current liabilities than it does current assets, B) has positive net working capital, C) has negative net working capital D) pays cash for its inventory, E) has more cash than inventory.

4- all else equal, an increase in which one of the following will increase owner's equity?

A) increase in accounts payable, B) decrease in net fixed assets, C) decrease in accounts receivable , D) increase in inventory, E) decrease in net working capital

5- a firm with inventory of $130, total current assets of $511 and current  liabilities of $412 has a quick ratio (acid test) of?

6- During the latest year, xyz corporation has total sales of $200,000, net income of $10000 and its year-end total assets were $250,000,  the firm's total debt to total assets ratio was 30%

what is firm's total assets turnover?

7- During the latest year, xyz corporation has total sales of $200,000 net income $20,000, its year-end total assets were 230,000,  the firm's total debt to total assets ratio was 30%,

what is firm's return on assets (ROA)

8- Company x has profits margin of 5%, total assets turnover of 1.8 and total debt to total assets ratio of 30%,, what is the company's ROE?

Answer 1

1- which one of the following is not included in net working capital?

B) retained earnings

Working Capital =current asset-Current Liabilities

Retained earnings is classified under equity

2 Depreciation does which one of the following for a profitable firm?

decrease net income

Because depreciation is an expense

4- all else equal, an increase in which one of the following will increase owner's equity?

decrease in accounts receivable

TOtal Liabilities and equity =Total liabilities +Equty

Hence decrease in Total liabilities means increase in Equity

5- a firm with inventory of $130, total current assets of $511 and current  liabilities of $412 has a quick ratio (acid test) of?

Quick ratio =(Current Assets-Inventory)/current  liabilities=(511-130)/412=.92