Chapter 13, Problem 13.2KTQ

Quiz 2:

Solvency

Debt-to-equity ratio

Times interest earned ratio

Debt service coverage ratio

Cash flow from operations to capital expenditures ratio

Profitability

Return on assets ratio

Return on sales ratio

Asset turnover ratio

Return on common stockholders’ equity ratio

Leverage

Earnings per share (EPS)

Price/earnings (P/E) ratio

Dividend payout ratio

Dividend yield ratio

1. A measure of a company’s success in earning a return for the common stockholders.
2. The relationship between a company’s performance according to the income statement and its performance in the stock market.
3. The ability of a company to remain in business over the long term.
4. A variation of the profit margin ratio; measures earnings before payments to creditors.
5. A company’s bottom line stated on a per-share basis.
6. The percentage of earnings paid out as dividends.
7. The ratio of total liabilities to total stockholders’ equity.
8. A measure of the ability of a company to finance long-term asset acquisitions with cash from operations.
9. A measure of a company’s success in earning a return for all providers of capital.
10. The relationship between net sales and average total assets.
11. The relationship between dividends and the market price of a company’s stock.
12. The use of borrowed funds and amounts contributed by preferred stockholders to earn an overall return higher than the cost of these funds.
13. An income statement measure of the ability of a company to meet its interest payments.
14. A statement of cash flows measure of the ability of a company to meet its interest and principal payments.
15. How well management is using company resources to earn a return on the funds invested by various groups.