The debt to assets ratio measuresthe proportion of interest paid relative to dividends paid.the company's profitability.O whether interest can be paid on debt in the current year.O the percentage of the total assets provided by creditors.

The debt to asset ratio is a leverage ratio that measures the number of total assets that are…

Answered: ne debt to O the F

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 10CDQ

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When do companies recognize gains and losses from the extinguishment of debt? Where are the gains and losses disclosed on the income statement?
What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customers
Owners equity represents which of the following? A. the amount of funding the company has from issuing bonds B. the sum of the retained earnings and accounts receivable account balances C. the total of retained earnings plus paid-in capital D. the business owners/owners share of the company, also known as net worth or net assets
Which of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c. Sales Ă· Assets b. Assets Ă· Equity d. Net Income Ă· Net Sales
The current ratio: a. Is used to help assess a company's ability to pay its debts in the near future. b. Measures the effect of operating income on profit. c. Is used to measure the relationship between assets and long-term debt. d. Is used to measure a company's collection period.
Which financial ratio measures a company's ability to pay its short-term obligations? a) Debt-to-equity ratio b) Current ratio c) Return on investment d) Gross profit margin
The debt to equity ratio is expressed as a. Total Liabilities Total Equity. b. Operating Income Interest Expense. c. Total Liabilities + Total Assets. d. Long-Term Debt Total Equity.
The debt ratio is calculated by dividing:a. total assets by total debt.b. total debt by total assets.c. total assets by long-term liabilities.d. long-term liabilities by total assets.
The required return on the debt e.The required return on the company (i.e., stock and debt combined) after the refinancing
7. A measure of the Company's long term debt paying ability is Select one: a. Dividend payout b. time interest earned c. Return on assets d. Length of the operating cycle
Which of the following financial measures are used to determine a company's credit rating? a)A company's current ratio, quick ratio, inventory turnover ratio, and default risk ratio b) Its ratio of annual interest payments to net profits, current ratio, working capital ratio, debt-equity ratio, and percentage return on capital employed c) Its loans outstanding as a percentage of total revenues, default risk ratio, inventory turnover ratio, and long-term debt-to-equity ratio d) Its total debt-equity ratio, current ratio, working capital ratio, and ratio of prior-year cash flow from operations to prior-year interest payments e) The percentage by which prior-year cash flow from operations covers a company's prior-year interest payments, the company's debt-asset ratio, its dividend payout ratio, and its default risk ratio
The income statement of Small Town, Inc. is as shown below: Small Town, Inc. Comparative Income Statement Year Ended December 31, 2025 (In millions) Net Sales Cost of Goods Sold Gross Profit Operating Expenses: O A. 41.89% O B. 60.81% O C. 39.19% O D. 28.38% $ 7,400 2,900 4,500

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