A) Increase the number of years over which fixed assets are depreciated for tax purposes.
B) Pay down the accounts payables.
C) Reduce the days' sales outstanding (DSO) without affecting sales or operating costs.
D) Pay workers more frequently to decrease the accrued wages balance.
E) Reduce the inventory turnover ratio without affecting sales or operating costs.
Correct Answer
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Multiple Choice
A) The total assets turnover decreases.
B) The TIE declines.
C) The DSO increases.
D) The EBITDA coverage ratio increases.
E) The current and quick ratios both decline.
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Multiple Choice
A) Other things held constant, the lower the current ratio, the lower the interest rate the bank would charge the firm.
B) The lower the company's EBITDA coverage ratio, other things held constant, the lower the interest rate the bank would charge the firm.
C) Other things held constant, the higher the debt ratio, the lower the interest rate the bank would charge the firm.
D) Other things held constant, the lower the debt ratio, the lower the interest rate the bank would charge the firm.
E) The lower the company's TIE ratio, other things held constant, the lower the interest rate the bank would charge the firm.
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Multiple Choice
A) 0.90
B) 1.12
C) 1.40
D) 1.68
E) 2.02
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True/False
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Multiple Choice
A) If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding will decline.
B) If a security analyst saw that a firm's days' sales outstanding (DSO) was higher than the industry average and was also increasing and trending still higher, this would be interpreted as a sign of strength.
C) If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding (DSO) will increase.
D) There is no relationship between the days' sales outstanding (DSO) and the average collection period (ACP) .These ratios measure entirely different things.
E) A reduction in accounts receivable would have no effect on the current ratio, but it would lead to an increase in the quick ratio.
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Multiple Choice
A) The transaction would improve both firms' financial strength as measured by their current ratios.
B) The transactions would raise Lofland's financial strength as measured by its current ratio but lower Smaland's current ratio.
C) The transactions would lower Lofland's financial strength as measured by its current ratio but raise Smaland's current ratio.
D) The transaction would have no effect on the firm' financial strength as measured by their current ratios.
E) The transaction would lower both firm' financial strength as measured by their current ratios.
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True/False
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Multiple Choice
A) 3.33
B) 3.50
C) 3.68
D) 3.86
E) 4.05
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Multiple Choice
A) 4.36%
B) 4.57%
C) 4.80%
D) 5.04%
E) 5.30%
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Multiple Choice
A) 5.66%
B) 5.95%
C) 6.27%
D) 6.58%
E) 6.91%
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Multiple Choice
A) The times interest earned ratio will decrease.
B) The ROA will decline.
C) Taxable income will decrease.
D) The tax bill will increase.
E) Net income will decrease.
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Multiple Choice
A) 1.40%
B) 1.56%
C) 1.73%
D) 1.93%
E) 2.12%
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True/False
Correct Answer
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Multiple Choice
A) 12.0
B) 12.6
C) 13.2
D) 13.9
E) 14.6
Correct Answer
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Multiple Choice
A) Its total assets turnover must equal the industry average.
B) Its total assets turnover must be above the industry average.
C) Its return on assets must equal the industry average.
D) Its TIE ratio must be below the industry average.
E) Its total assets turnover must be below the industry average.
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Multiple Choice
A) 5.37%
B) 5.65%
C) 5.95%
D) 6.24%
E) 6.55%
Correct Answer
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Multiple Choice
A) An increase in a firm's debt ratio, with no changes in its sales or operating costs, could be expected to lower the profit margin.
B) The ratio of long-term debt to total capital is more likely to experience seasonal fluctuations than is either the DSO or the inventory turnover ratio.
C) If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE.
D) An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio.
E) An increase in the DSO, other things held constant, could be expected to increase the ROE.
Correct Answer
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True/False
Correct Answer
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Multiple Choice
A) Increase inventories while holding sales and cost of goods sold constant.
B) Increase accounts receivable while holding sales constant.
C) Increase EBIT while holding sales constant.
D) Increase accounts payable while holding sales constant.
E) Increase notes payable while holding sales constant.
Correct Answer
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