Entrepepe 5

What does the Receivable Turnover measure?

• The efficiency of collecting receivables

• The ability to meet interest obligations

• The level of debt financing

• The speed of inventory turnover

What is the formula for calculating Receivable Turnover?

• Cost of Goods Sold / Average Inventory

• Total Liabilities / Total Equity

• 360 Days / Receivable Turnover

• Average Net Credit Sales / Average Accounts Receivable

What does the Average Collection Period indicate?

• The average number of days to collect receivables

• The number of times inventory is sold

• The proportion of debt to equity

• The ability to pay interest expenses

How is the Average Collection Period calculated?

• Income Before Interest and Taxes / Interest Expense

• Total Liabilities / Total Equity

• Cost of Goods Sold / Average Inventory

• 360 Days / Receivable Turnover

What does Inventory Turnover measure?

• The proportion of debt to equity

• The efficiency of collecting receivables

• The number of times inventory is sold and replaced

• The average collection period

What is the formula for Inventory Turnover?

• Average Net Credit Sales / Average Accounts Receivable

• Total Liabilities / Total Equity

• Cost of Goods Sold / Average Inventory

• Income Before Interest and Taxes / Interest Expense

What does the Debt to Equity Ratio indicate?

• The ability to meet interest obligations

• The efficiency of collecting receivables

• The proportion of debt financing relative to equity financing

• The average number of days to collect receivables

How is the Debt to Equity Ratio calculated?

• Total Liabilities / Total Equity

• 360 Days / Receivable Turnover

• Cost of Goods Sold / Average Inventory

• Average Net Credit Sales / Average Accounts Receivable

What does Times Interest Earned reflect?

• The proportion of debt to equity

• The efficiency of inventory turnover

• The average collection period

• The ability to meet interest obligations with income

What is the formula for Times Interest Earned?

• Total Liabilities / Total Equity

• Income Before Interest and Taxes / Interest Expense

• Average Net Credit Sales / Average Accounts Receivable

• Cost of Goods Sold / Average Inventory