Chapter 14 Quiz

What type of analysis is indicated by the following?

• Horizontal analysis

• Vertical analysis

• Liquidity analysis

• Profitability analysis

The ability of a company to pay its debts is called:

• earnings per share (EPS)

• liquidity

• profitability

• solvency

The ratio that measures how much of a company is financed by debt and equity is the

• current ratio

• ratio of fixed assets to long-term liabilities

• ratio of liabilities to stockholders' equity

• price-earnings ratio

The ratio that measures the “instant” debt-paying ability of a firm, by focusing on current assets that can be easily converted to cash, is the:

• working capital

• quick ratio

• days' sales in inventory

• ratio of fixed assets to long-term liabilities

A measure useful in evaluating efficiency in the management of inventories is the:

• working capital

• quick ratio

• days' sales in inventories

• ratio of fixed assets to long-term liabilities

__________ = Current Assets - Current Liabilities

• working capital

• quick ratio

• accounts receivable turnover

• asset turnover

Fixed assets(net) / Long term Liabilites

• times interest earned

• ratio of liabilities to stockholders equity

• ratio of fixed assets to long term liabilities

• working capital

What is the method of computation for return on stockholders' equity?

• net income - preferred dividends / average common stockholders equity

• net income - preferred dividends / shares of common stock outstanding

• market price per share of common stock / earnings per share of common stock

• net income / average total stockholders equity

Which measures are looked at by long term creditors?

• profitability measures

• solvency measures

• liquidity measures

• analytical measures

which measures are looked at by long term creditors?

• solvency measures

• liquidity measures

• analytical measures

• profitability measures