Homework Answers
The equity multiplier
We see that the equity multiplier measures the degree to which the firm uses debt
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QUESTION 6 Which of these measures the degree to which the firm uses debt? the current...
QUESTION 4: Benchmarking refers to the writing off of failed assets. True False QUESTION 5: For...
QUESTION 4: Benchmarking refers to the writing off of failed assets. True False QUESTION 5: For firms with inventory, the current ratio will be larger than the quick ratio. True False QUESTION 6: Which of these measures the degree to which the firm uses debt? the current ratio the times interest earned the equity multiplier all of these
Ch 04, blueprint probs, analysis of financial statements. 4: Analysis of Financial Statements: Debt Management Ratios...
Ch 04, blueprint probs, analysis of financial statements. 4: Analysis of Financial Statements: Debt Management Ratios Debt management ratios measure the extent to which a firm uses financial leverage and the degree of safety afforded to (1)(creditors, analysts, shareholders)They include the: (1) Debt-to-capital ratio, (2) Times interest earned ratio (TIE), and (3) EBITDA coverage ratio. The first ratio analyzes debt by looking at the firm's (2)(cashflow statement, income statement, balance sheet), while the last two ratios analyze debt by looking...
Garwryk, Inc., which is financed with debt and equity, presently has a debt ratio of 79...
Garwryk, Inc., which is financed with debt and equity, presently has a debt ratio of 79 percent. What is the firm's equity multiplier? How is the equity multiplier related to the firm's use of debt financing (i.e., if the firm increased its use of debt financing would this increase or decrease its equity multiplier)? Explain. What is the firm's equity multiplier? The equity multiplier is given by: Equity Multiplier equals StartFraction 1 Over 1 minus Debt Ratio EndFraction The equity...
Which of the following ratios measures how effectively a firm is managing its assets? quick ratio...
Which of the following ratios measures how effectively a firm is managing its assets? quick ratio times interest earned profit margin inventory turnover ratio price earnings ratio
(1) Because a firm that uses debt can be as profitable as a firm that does...
(1) Because a firm that uses debt can be as profitable as a firm that does not, some financial ratios are calculated with NOPAT (Net Operating Profit After Tax) rather than with net income. (2) Free Cash Flow to the Firm measures the cash available to equity investors, after all debt payments (including interest and principal), have been made. (3) For Company T during 2017, the change in accounts receivable was positive, the change in inventories was positive, and there...
A firm has a debt-to-equity ratio of 1.4, a profit margin of 15%, $600,000 in debt...
A firm has a debt-to-equity ratio of 1.4, a profit margin of 15%, $600,000 in debt with an interest rate of 10%, EBIT of $220,000, and a tax rate of 30%. a. What is the firm’s total asset turnover? b. What is the firm’s times interest earned? c. What is the firm’s return on equity?
Which of the following measures a company's ability to pay its current liabilities? earnings per share...
Which of the following measures a company's ability to pay its current liabilities? earnings per share inventory turnover times interest earned current ratio
QUESTION 14 Which of the following ratios is purely a performance ratio? current ratio times interest...
QUESTION 14 Which of the following ratios is purely a performance ratio? current ratio times interest earned ratio return on assets ratio debt to assets ratio (debt ratio)
QUESTION 11 When a firm uses cash to buy inventory, what happens to its current ratio?...
QUESTION 11 When a firm uses cash to buy inventory, what happens to its current ratio? Current ratio decreases. Current ratio increases. Current ratio does not change. It cannot be determined. 1 points QUESTION 12 Starbucks has cash of $2,757 million, inventory of $1,529 million, total current assets of $5,653 million, and total current liabilities of $6,168 million on its latest balance sheet. Compute its current ratio. 0.45 1.09 0.92 0.67 1 points QUESTION 13 What is cash...
Clear All Current ratio A measure of a company's ability to pay its short-term liabilities out...
Clear All Current ratio A measure of a company's ability to pay its short-term liabilities out of short-term assets Debt ratio A measure that compares only the most liquid assets to current liabilities Times-interest-earned ratio An income statement measure of the ability of a company to service its debts Quick ratio A measure of the degree of protection afforded creditors in case of insolvency Debt-to-equity ratio A ratio that indicates what proportion of equity and debt a company is using...
Which of the following ratios measures how effectively a firm is managing its assets? quick ratio times interest earned profit margin inventory turnover ratio price earnings ratio
Which of the following measures a company's ability to pay its current liabilities? earnings per share inventory turnover times interest earned current ratio
QUESTION 14 Which of the following ratios is purely a performance ratio? current ratio times interest earned ratio return on assets ratio debt to assets ratio (debt ratio)
Clear All Current ratio A measure of a company's ability to pay its short-term liabilities out of short-term assets Debt ratio A measure that compares only the most liquid assets to current liabilities Times-interest-earned ratio An income statement measure of the ability of a company to service its debts Quick ratio A measure of the degree of protection afforded creditors in case of insolvency Debt-to-equity ratio A ratio that indicates what proportion of equity and debt a company is using...
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