Use the following information to answer questions 4 and 5 Lavish Loans Pty Ltd Industry Average 1.5:1 2017 2018 Current Ratio 1:1 2.3:1 Debt to equity ratio Expense ratio 2:1 1.3:1 1.3:1 8% 14% 10% 4. What was Lavish Loans Pty Ltd.'s level of gearing in 2017? (а) 1:1 (b) 1.3 : 1 (c) 2:1 (d) 2.3: 1 5. Which strategy would be most beneficial to Lavish Loans Pty Ltd? (a) Using an overdraft to increase access to cash in the short term (b) Developing cost centres in order to help reduce expense levels (c) Issuing more shares to reduce the business's over reliance on debt (d) Engaging in sale and lease back in order to improve the 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
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Use the following information to answer questions 4 and 5
Lavish Loans Pty Ltd
Industry
Average
1.5:1
2017
2018
Current Ratio
1:1
2.3: 1
Debt to equity ratio
Expense ratio
2:1
1.3: 1
1.3:1
8%
14%
10%
4. What was Lavish Loans Pty Ltd.'s level of gearing in 2017?
(а) 1: 1
(b) 1.3 : 1
(c) 2:1
(d) 2.3 : 1
5. Which strategy would be most beneficial to Lavish Loans Pty Ltd?
(a) Using an overdraft to increase access to cash in the short term
(b) Developing cost centres in order to help reduce expense levels
(c) Issuing more shares to reduce the business's over reliance on debt
(d) Engaging in sale and lease back in order to improve the current ratio
Transcribed Image Text:Use the following information to answer questions 4 and 5 Lavish Loans Pty Ltd Industry Average 1.5:1 2017 2018 Current Ratio 1:1 2.3: 1 Debt to equity ratio Expense ratio 2:1 1.3: 1 1.3:1 8% 14% 10% 4. What was Lavish Loans Pty Ltd.'s level of gearing in 2017? (а) 1: 1 (b) 1.3 : 1 (c) 2:1 (d) 2.3 : 1 5. Which strategy would be most beneficial to Lavish Loans Pty Ltd? (a) Using an overdraft to increase access to cash in the short term (b) Developing cost centres in order to help reduce expense levels (c) Issuing more shares to reduce the business's over reliance on debt (d) Engaging in sale and lease back in order to improve the current ratio
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