Financial Ratios Quiz

All of the following are affected when merchandise is purchased on credit except

• Total current assets

• Net working capital.

• Total current liabilities.

• Current ratio.

The cash conversion cycle of a firm can be reduced by:

• Reducing the receivable turnover ratio.

• Decreasing the payable turnover ratio.

• Increasing inventory conversion period.

• Reducing the accounts payable deferral period.

On its year-end financial statements, Caper Corporation showed sales of $3,000,000, net fixed assets of $1,300,000, and total assets of $2,000,000. The company's fixed asset turnover is

• 1.5 times.

• 43.3%.

• 2.3 times

• 65%.

On December 31, 20X1, Northpark Co. collected a receivable due from a major customer. Which of the following ratios would be increased by this transaction?

• Inventory turnover ratio.

• Receivable turnover ratio.

• Current ratio.

• Quick ratio.

Using a 365-day year, compute Lowell's accounts receivable turnover in days.

• 26.1 days.

• 33.2 days.

• 36.5 days.

• 39.8 days.

Calculate the degree of operating leverage based on the below information.

• 0.35

• 2.84

• 0.65

• 1.54

The owner of a chain of grocery stores has bought a large supply of mangoes and paid for the fruit with cash. This purchase will adversely impact which one of the following?

• Working capital

• Current ratio

• Quick or acid test ratio

• Price earnings ratio

In terms of financial ratios, the length of time taken by an entity from receiving raw materials to selling the finished goods is called as:

• Cash conversion cycle.

• Inventory conversion period.

• Accounts payable deferral period.

• Receivables collection period.

The company's debt-to-equity ratio is

• 0.50 to 1.

• 0.37 to 1.

• 0.33 to 1.

• 0.13 to 1.

Using a 360 day per year, which of the following would be least relevant to calculate inventory conversion period?

• Average inventory.

• Inventory turnover ratio.

• Cost of goods sold per day.

• Average accounts receivables.