ESS. OF INVESTMENTS - ETEXT ACCESS CARD
11th Edition
ISBN: 9781265909055
Author: Bodie
Publisher: MCG
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Chapter 14, Problem 5PS
A company’s current ratio is
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If a company has a current ratio of 1.5:1, what effects will the borrowing of cash by
long-term debt and collection of accounts receivable have on the ratio?
Decrease and decrease
) Decrease and no effect
Increase and increase
Increase and no effect
1. which of the following transactions and events would result in a deterioration in Quick Ratio?
a. selling goods on credit at the normal mark-up
b. acquiring cash proceeds from a 5-year interest-only bank loan
c. a payment for wages owing from the previous period
d. A and B only
e. A and C only
f. B and C only
g. All of the above
h. None of the above
2. Based on your analysis from Part One, which of the following transactions and events would result in an improvement in Interest Coverage Ratio in year 2021?
a. receiving cash for unearned sales revenue
b.a payment of income tax owing from the previous period
c.an adjustment for accrued interest revenue
d.A and B only
e.A and C only
f. B and C only
g. All of the above
h. None of the above
ACCOUNTING
ASAP
Assume the following data: EBIT = 100; Depreciation = 40; Interest = 20; Dividends = 10. Calculate the cash coverage ratio.
Select one:
a. 7.0x
b. 4.7x
c. 14.0x
d. 5.0x
Chapter 14 Solutions
ESS. OF INVESTMENTS - ETEXT ACCESS CARD
Ch. 14 - Prob. 1PSCh. 14 - Prob. 2PSCh. 14 - The Crusty Pie Co., which specializes in apple...Ch. 14 - The ABC Corporation has a profit margin on sales...Ch. 14 - A company’s current ratio is 2. If the company...Ch. 14 - Cash flow from investing activities excludes:...Ch. 14 - Cash flow from operating activities includes:...Ch. 14 - Prob. 8PSCh. 14 - Prob. 9PSCh. 14 - Prob. 10PS
Ch. 14 - Prob. 11PSCh. 14 - Use the DuPont system and the following data to...Ch. 14 - A firm has an ROE of 3 , a debt/equity ratio of...Ch. 14 - A firm has a tax burden ratio of 0.75 , a leverage...Ch. 14 - A11 analyst gathers the following information...Ch. 14 - Here are data On two Firms: LO142 Equity ($...Ch. 14 - Prob. 1CPCh. 14 - Which of the following best explains a ratio of...Ch. 14 - Use the Financial statements for Chicago...Ch. 14 - Prob. 4CPCh. 14 - The information in the following table comes from...Ch. 14 - Scott Kelly is reviewing Master Toy’s financial...Ch. 14 - The DuPont formula defines the net return on...Ch. 14 - Go to finance.yahoo.com to find information about...Ch. 14 - Answer the following questions for these two toy...Ch. 14 - Prob. 3WM
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- 6 Which of the following will increase the cash conversion cycle? ay an increase in inventory turnover a. b. an increase in accounts receivable turnover an increase in accounts payable turnover C. noie d. a decrease in average age of inventory 1owene moy of ebnoqunoo h l oh obiond 7. Operating cycle measures a, the time that elapses from the firm's receipt of raw materials until it pays for those materials bohsa yionni b. the time that elapses from the payment of raw materials until the firm is paid for its finished product c. the time that elapses from the firm's receipt of raw materials to begin production to its collection of cash from the sale of the finished product d. none of the above o la brlisaib15 0 albfieshtbeibrog tU nM s irionary and motives bo g sldsysg zonuoon d lliw sbyo 8. Operating cycle comprises of in a. the average age of inventory b. the average age of receivables ebyo gabso 21i as dagnol smsa of receivables less the average age of c. the average age of inventory…arrow_forwardWhich of the following would result when a company lends cash to a customer in exchange for a ten month note receivable? a. a noncurrent asset and an investing cash flow are created. b. a noncurrent asset and a financing cash flow are created. c. a current asset and a financing cash flow are created. d. a current asset and an investing cash flow are created.arrow_forwardPlease Help! I am struggling so much with this chapter. Instructions: Determine the following measures for 20Y2, rounding to one decimal place including percentages, except for per-share amounts. May I have help with the sub-parts below please (4-18)? 4. Accounts Receivable Turnover 5. Number of days' sales in receivables 6. Inventory Turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholder's equity 10. Times interest earned 11. Asset Turnover 12. Return on Total Assets 13. Return on Stockholder's Equity 14. Return on Common Stock 15. Earnings per share on Common Stock 16. Price-earnings ratio 17. Dividends per share of Common Stock 18. Dividend Yieldarrow_forward
- How should the company respond to the ongoing situation to mitigate risk of failing the working capital given the following financial ratio? 1. Liquidity ratio : current ratio: 2.61xquick ratio: 2.56cash ratio: 0.85 2. Accounts receivable turnover: 4.08Ave collection period: 89.46 days 3. Inventory turnover: 38.76ave age of inventory: 9.42 4. Average payable turnover: 1.04ave payment period: 350.96 Note: Their working capital is 22,887,683 Current asset (37,127,683) - current liabilities (14,260,065) = 22,887,683arrow_forwardte.2arrow_forwardwplease answer allarrow_forward
- please answer thisarrow_forwardIf a bank has gross charge-offs of $25 for the current year, recoveries of $40, and provision for loan losses of $30, how much will the reserve for loan losses change? a. $45 b. $+15 c. none of the above. d. $-15arrow_forwardr. Principal s refers to the amount of money borrowed or invested on the origin 4. refers to the amount of time in years the money is borrowed or ted. 5. Dme term MOHurity value 6. Futuie value refers to the amount after t years that the lender receives from orrower on the maturity date. efers to the amount paid or earned for the use of the money. 7. Inferest FOMPLETION: Complete the table by finding the unknowns. IMPLE INTEREST Maturity Value (F) Principal (P) Rate (r) Time (t) Interest (I) 10, 000 1002.5% nonl year 3, 500 20, 000 2 years 10,000 30, 000 30, 000 20% 3 years 48, 000 40, 000 15% 24, 000 64, 000 10% 6 months 2, 500 52, 500arrow_forward
- What should be the effect of following changes on level of firm’s receivables: Interest rate increases Recession Production and selling cost increases 4. The firm changes its credit terms from “2/10, net 30” to “3/10, net 30”arrow_forwardWhat relationship exists between the average collection period and accounts receivable turnover? Select one: a. There is a direct and proportional relationship. b. Both ratios are expressed in number of days. c. As average collection period increases (decreases) the accounts receivable turnover decreases (increases). d. Both ratios are expressed in number of times receivables are collected per year.arrow_forwardHello In calculating average accounts receivable net from financials, would I include: (current year and previous year) trade receivables, royalty advances, prepayments & accrued income, receivables from other parties, then divide by 2? Or would I go the other route to calculate average accounts receivable net and include: those receivables(current yr & prior yr) in the ageing of receivables group, add together and divide by 2? Thanksarrow_forward
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