Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 12, Problem 12RQ
To determine
Whether the following changes in the profitability ratios is good news or bad news for the company.
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Determine whether each of the following changes in risk ratios is good news or bad news about a company.a. Increase in receivables turnover.b. Decrease in inventory turnover.c. Increase in the current ratio.d. Increase in the debt to equity ratio.
Which of the following ratios would NOT be considered to be a measure of a business
economic performance?
A.Return on assets
B.Inventory days
C.Return on equity
D.Sales growth
Which of the following would indicate an improvement in a
company's financial position, holding other things constant?
The profit margin declines.
O The MV/BV ratio increases.
The ROA decreases.
The TIE increases.
O The liability-to-asset ratio increases.
Chapter 12 Solutions
Financial Accounting
Ch. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - 5.In performing horizontal analysis, why is it...Ch. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQ
Ch. 12 - Prob. 11RQCh. 12 - Prob. 12RQCh. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - Prob. 15RQCh. 12 - Prob. 16RQCh. 12 - Prob. 17RQCh. 12 - Prob. 18RQCh. 12 - Prob. 19RQCh. 12 - Prob. 20RQCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Prob. 12.5BECh. 12 - Universal Sports Supply began the year with an...Ch. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Classify each of the following accounting...Ch. 12 - Classify each of the following accepted accounting...Ch. 12 - Prob. 12.1ECh. 12 - Prob. 12.2ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - The income statement for Stretch-Tape Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Distinguish between conservative and aggressive...Ch. 12 - Prob. 12.1APCh. 12 - Prob. 12.2APCh. 12 - Prob. 12.3APCh. 12 - Prob. 12.4APCh. 12 - Prob. 12.5APCh. 12 - Prob. 12.6APCh. 12 - Prob. 12.1BPCh. 12 - Prob. 12.2BPCh. 12 - Prob. 12.3BPCh. 12 - Prob. 12.4BPCh. 12 - Prob. 12.5BPCh. 12 - Prob. 12.6BPCh. 12 - Prob. 12.1APCPCh. 12 - Prob. 12.2APFACh. 12 - Prob. 12.3APFACh. 12 - Prob. 12.4APCACh. 12 - Prob. 12.5APECh. 12 - Prob. 12.7APWCCh. 12 - Prob. 12.8APEM
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following typically is true for profitability ratios? a. Growth stocks have lower price to earnings ratios.b. Companies in more competitive industries have higher profit margins.c. The gross profit ratio declines as competition increases.d. When a company has debt, its return on equity will be lower than its return on assets.arrow_forwardThe quick ratio and the current ratio are used to determine a company's profitability. True or False True Falsearrow_forwardGross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be: A. Increase in Costs of Goods Sold, B. If Increase in Expense, C. Increase in Dividend, D. Decrease in Sales.arrow_forward
- The balance in retained earnings is not affected by Choose net income. aluation of a company's ability to pay current net loss. issuance of common stock. dividends.arrow_forwardWhich of the following is NOT a measure of a company's profitability? a) Return on Investment (ROI) b) Earnings Before Interest and Taxes (EBIT) c) Gross Profit Margin d) Debt -to-Equity Ratioarrow_forwardProfitability Ratios: a. Measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. b. Measure the ability of the company to survive over a long period of time. c. Measure the income or operating success of a company for a given period of time.arrow_forward
- A ratio that measures a company’s profitability is thea. leverage ratio.b. gross margin percentage.c. current ratio.d. times-interest-earned ratio.arrow_forwardWhich 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 decreasesarrow_forwardWhich is wrong about the use of financial statement analysis? a. Seasonality factors may contribute to a sort of distortion on the financial ratio’s trends. b. Activity ratios, such as profit margin and return on asset, tells how efficient the company uses its resources and assets c. Horizontal analysis of financial statements is conducted by analyzing inter-period financial statements d. The Liquidity of the company can be determined using acid-test ratio and current ratioarrow_forward
- 4.arrow_forwardWhich of the following is true? a. Return on Investment equals Margin divided by Average Operating Assets b. Turnover equals Sales divided by Stockholders Equity c. Margin equals Return on Investment divided by Turnover d. Return on Investment equals Margin divided by Turnover.arrow_forwardWhat does the current ratio inform you about a company? A. The efficient use of assets. B. The company's profitability. C. The extent of slow-moving inventories. D. The company's liquidity.arrow_forward
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