Accounting - Chapter 17

A company having earnings per share of $5.67 is more profitable than a company having earnings per share of $4.32.

• True

• False

The current ratio assumes a business could sell its merchandise inventory quickly.

• True

• False

A corporation's earnings per share can only be compared to its earnings per share during prior fiscal years.

• True

• False

A company has set its gross margin target range at 40% to 42%. An increase in the ratio from 38% to 39% is a positive trend.

• True

• False

A corporation should compare its working capital to industry standards.

• True

• False

The dividend ratio is the most widely recognized measure of a corporation's financial performance.

• True

• False

An accounts receivable ratio above the target range may indicate that a company is too liberal in extending credit to its customers.

• True

• False

Investors are willing to pay a higher P/E ratio for growth stocks than for income stocks.

• True

• False

Managers who want to control operating expenses will be more interested in operating margin than the total operating expense ratio.

• True

• False

The gross profit ratio is also referred to as the gross margin.

• True

• False