Which of the following statements is TRUE?When EBIT and total assets both increase by 25%, the basic earnings power will also increaseO a.An increase in the quick ratio over time means that the company's liquidity position is improving.O b.approximately by 25%.A lower than the industry's average inventory turnover ratio means that the company turns over or sellsO C.and replaces its inventory more times per year.A higher than industry average P/E ratio indicates the company's stock must be overvalued.d.

The question is related to identifying the true Statement.

Answered: Which of the following statements is…

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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Which of the following generally indicates an improvement in a company’s financial position? The times interest earned ratio declines The days sales outstanding ratio increases The quick Ratio increases The current ratio declines The total assets turnover ratio decreases
Subject :- Accounting
A company’s inventory expressed as a percentage of current assets increased from 25% last November to 35% this November. The factor that is least likely to cause this increase is that the corporation a. Has inventory that is becoming obsolete. b. Is a seasonal company with traditionally higher activity in the winter months. c. Used a material amount of cash from selling its short-term investments to purchase land. d. Is beginning to experience high growth.
Bob's Inc has the following balance sheet and income statement data see image... The new CFO thinks that inventory are excessive and could be lowered to cause the current ratio to equal industry average 3.00 w/o affecting either sales or net income. assuming that inventories are sold off and not replaced to get the current ratio to the target level and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?
Which of the following are assumptions of the self-supporting growth model? Check all that apply. The firm’s total asset turnover ratio remains constant. The firm maintains a constant net profit margin. The firm maintains a constant ratio of assets to equity. The firm must issue the same number of new common shares that it issued last year.
Relation between Current Ration and Quick Ration. A firm has experienced a decrease in its current ratio but an increase in its quick ratio during last three years. What is the likely explanation for these results?
Grant Communications is forecasting its financial statements for the upcoming year. Highlights include: Current assets of $6 million Current ratio of 2.0 Sales of $20 million Inventory turnover ratio (Sales/Inventory) of 6 The company's CFO is concerned about the forecasted inventory turnover ratio. Her goal is cut inventory enough to obtain an inventory turnover ratio of X, which is the industry average, while still maintaining sales at $20 million. If the company can accomplish this goal, the cash generated from the cut in inventories will be used to cut accounts payable. This will give the firm a Quick Ratio [(Current Assets - Inventory) / Current Liabilities] of 1.50. What is X, the desired inventory turnover ratio? Enter your answer, truncated to 2 decimal places. For example, enter 7.777 as 7.77.
Consider a retail firm with a net profit margin of 3.15%, a total asset turnover of 1.82, total assets of $44.9 million, and a book value of equity of $17.4 million. c. If, in addition, the firm increased its revenues by 16% (maintaining this higher profit margin and without changing its assets or liabilities), what would be its ROE?
Loreto Inc. has the following financial ratios: asset turnover = 2.40; net profit margin (i.e., net income/sales) = 5%; payout ratio = 30%; equity/assets = 0.40. a. What is Loreto's sustainable growth rate? b. What is its internal growth rate?
Problem: Jasper Jewelry has $150 million in sales. The company expects that its sales will increase 4% this year. Jasper's CFO uses a simple linear regression to forecast the company's inventory level for a given level of projected sales. On the basis of recent history, the estimated relationship between inventories and sales (in millions of dollars) is as follows: Inventories = $10 + 0.07(Sales) Given the estimated sales forecast and the estimated relationship between inventories and sales, what is your forecast of the company's year-end inventory level? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places.
A firm's current ratio is above the previous year; however, the firm's quick ratio is below the previous year. What do these ratios suggest about the firm? Has relatively more total current assets and even more inventory than the previous year Is very efficient at managing inventories in the current year Has liquidity that is superior to the average firm in the industry None of these is correct

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