Which of the following statements is most correct?(a) Generally, firms with high profit margins have high asset turnover ratios.(b) Having a high current ratio and a high quick ratio is always a good indication a firm is managing its liquidity position well.(c) Knowing that return on assets {ROA) measures the firm's effective utilization of assets without considering how these assets are financed, two firms with the same EBIT must have the same ROA.(d) One way to improve the current ratio is to use cash to pay off currentliabilities.
Which of the following statements is most correct?(a) Generally, firms with high profit margins have high asset turnover ratios.(b) Having a high current ratio and a high quick ratio is always a good indication a firm is managing its liquidity position well.(c) Knowing that return on assets {ROA) measures the firm's effective utilization of assets without considering how these assets are financed, two firms with the same EBIT must have the same ROA.(d) One way to improve the current ratio is to use cash to pay off currentliabilities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following statements is most correct?
(a) Generally, firms with high profit margins have high asset turnover ratios.
(b) Having a high
(c) Knowing that return on assets {ROA) measures the firm's effective utilization of assets without considering how these assets are financed, two firms with the same EBIT must have the same ROA.
(d) One way to improve the current ratio is to use cash to pay off current
liabilities.
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