9. A firm is considering actions which will raise its debt ratio. It is anticipated that these actions will have no effect on sales, operating income, or on the firm's total assets. If the firm does increase its debt ratio, which of the following will occur? A. Return on assets will increase. B. Basic earning power will decrease. C. Times interest earned will increase D. Profit margin will decrease. E. Total assets turnover will increase.
9. A firm is considering actions which will raise its debt ratio. It is anticipated that these actions will have no effect on sales, operating income, or on the firm's total assets. If the firm does increase its debt ratio, which of the following will occur? A. Return on assets will increase. B. Basic earning power will decrease. C. Times interest earned will increase D. Profit margin will decrease. E. Total assets turnover will increase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer number 9 and 10 only no need to explain. Thanks!
Transcribed Image Text:9. A firm is considering actions
which will raise its debt ratio. It is
anticipated that these actions will
have no effect on sales,
operating income, or on the
firm's total assets. If the firm
does increase its debt ratio,
which of the following will occur?
A. Return on assets will increase.
B. Basic earning power will decrease.
C. Times interest earned will increase.
D. Profit margin will decrease.
E. Total assets turnover will increase.
Transcribed Image Text:10. Five areas that financial ratios
concentrate on are: A. liquidity,
profitability, debt, efficiency,
market related;
A. liquidity, profitability, debt,
efficiency, market related;
B. profitability, strategy, liquidity,
auditing, share prices;
C. liquidity, current ratio, quick ratio,
interest cover, dividend cover;
D. market related, share prices,
dividend policy, debt policy, strategy
E. none of the above
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