Investors and financial analysts wanting to evaluate the operation efficiency of a firm'smanagers would probably look primarily at the firm'sA. Leverage/debt ratios.market value ratios.11.B.asset management ratios.D. liquidity ratios.C.12.in a non-interest bearing account, this will tend to lower the firm'sA. profit margin.B. return on equity.C. debt ratio.Other things held constant, if a firm holds cash balances in excess of their optimal levelD. current ratio.

Asset utilization ratios or asset management ratios are important for a company as it shows how…

Investors and financial analysts wanting to evaluate the operation efficiency of a firm's managers would probably look primarily at the firm's A. Leverage/debt ratios. B. market value ratios. C. asset management ratios. D. liquidity ratios. 11. Other things held constant, if a firm holds cash balances in excess of their optimal level in a non-interest bearing account, this will tend to lower the firm's A. profit margin. return on equity. debt ratio. 12. В. С. D. current ratio.

Investors and financial analysts wanting to evaluate the operation efficiency of a firm's managers would probably look primarily at the firm's A. Leverage/debt ratios. B. market value ratios. C. asset management ratios. D. liquidity ratios. 11. Other things held constant, if a firm holds cash balances in excess of their optimal level in a non-interest bearing account, this will tend to lower the firm's A. profit margin. return on equity. debt ratio. 12. В. С. D. current ratio.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Leverage relates to how much of someone else’s money a business or individual is using to finance its operations. Discuss leverage and the various debt ratios used by an organization. Discuss the benefits and perils of too much leverage. Choose a debt ratio and discuss the importance of monitoring that ratio. For example, the time's interest earned ratio is an important ratio to monitor because it shows if a firm can pay the interest payments on its debt each month. The benefits of leverage allow a firm to use borrowed funds to generate income. Too much leverage can make it difficult for a company to make those payments each month.
Which is easier to calculate directly, the expected rate of return on the assets of a firm or the expected rate of return on the firm’s debt and equity?
The level of financial risk to which a firm is exposed is dependent on the firm's:(a) tax rate(b) debt-equity ratio(c) return on assets(d) level of earnings before interest and taxes(e) operational level of risk
g) What was the trend in dividends (if any) for the firm?h) What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt) for the firm? i) Critically evaluate the financial strength of each of the companie based on the evidence presented in the Statement of Cash Flow. j) evaluate the companies for lending purposes will you select the company for lending?
A profitability measure of ROE is affected by the level of a firm’s debt. Thus,an investor must consider the debt-equity ratio to evaluate the firm’sprofitability. The debt-equity ratio determines a firm’s financial leverage whichindicates how much of assets the firm is able to deploy for each monetary unitof stockholders’ equity.1) Explain how the financial leverage effect can be defined as the differencebetween ROE and ROA. 2) Explain how the financial leverage effect is affected by the debt ratio and theinterest rate.
Which of the following statements is correct? a. Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in assets and spontaneous liabilities and subtracting operating income. b. The percentage of sales method of forecasting financial needs requires only a forecast of the firm's balance sheet. Although a forecasted income statement helps clarify the need, it is not essential to the percentage of sales method. c. Because dividends are paid after taxes from retained earnings, dividends are not included in the percentage of sales method of forecasting. d. Financing feedbacks describe the fact that interest must be paid on the debt used to help finance AFN and dividends must be paid on the shares issued to raise the equity part of the AFN. These payments would lower the net income and retained earnings shown in the projected financial statements. e. All of the statements above are false.
1. Which of the following pairs of financial statement analysis tool will be given more emphasis by a firm that is considering whether to grant trade credit or sell on account to a new client? Choices: Current and cash ratio Return on sales and return on asset Debt and debt-to-equity ratio Book value and price-to-earnings ratio 2. It is assumed that the Cost of equity and rate of return are both constant under Walter's Model of Dividend Relevance, if the cost of equity is higher than the rate of return, it is optimal that Choices: No dividend to be given to shareholders None of the choices is correct. The firm is indifferent as to distribute dividends or to reinvest the income All the earnings for the period shall be distributed to shareholders 3. Which of the following is correct with regards to cash discounts offering? Choices: These are granted because customer acquires high quantity of products and goods It is used lengthen the cash conversion cycle without putting pressure…
Having both current and quick ratios with values greater than 1.0 always indicates that the firm is managing its liquidity position well True or false
A. ROE is a common ratio analysts calculate for each of a firm's segments (true or false) B. FLEV (increases, decreases, or no effect), when a firm issues debt to repurchase common shares C. If a firm prepays its rent, accruals will (increase, decrease, or no effect) D. If there is an increase in cash sales, NOAT will (increase, decrease, or no effect) E. If there is a decrease in interest expense, SPREAD will (increase, decrease, or no effect)
Financial Ratios analysis is a part of Group of answer choices Fundamental Analysis Economic Analysis Industry Analysis Technical Analysis 2. Financial Ratio Analysis does not enable us to Group of answer choices Compare financial conditions across firms of different sizes. Determine the best time when to invest in a company’s stock. Measure trends of how well a firm is performing over time. How well a firm is managing its debt.
A firm will have a financing _________ whenever projected assets are greater than projected liabilities and equity. This is best remedied with _________. Deficit; line of credit Deficit; special dividend Surplus; line of credit Surplus; special dividend
When assessing a company’s Credit Risk, analysts use financial ratios to determine liquidity and solvency IS IT TRUE?

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