CF Chap 3

Which statement expresses all relative account values as a percentage of total assets?

• A) Pro forma balance sheet
• B) Common-size income statement
• C) Statement of cash flows
• D) Pro forma income statement
• E) Common-size balance sheet

You would like to compare your firm's cost structure to that of your competitors. However, your competitors are much larger in size than your firm. Which one of these would best enable you to compare costs across your industry?

• A) Pro forma balance sheet
• B) Common-size income statement
• C) Statement of cash flows
• D) Pro forma income statement
• E) Common-size balance sheet

Which one of these terms is most synonymous with the term "income from operations"?

• A) TTM
• B) EBIT
• C) LTM
• D) EBITDA
• E) EPS

Ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as:

• A) asset management ratios.
• B) long-term solvency measures.
• C) liquidity measures.
• D) profitability ratios.
• E) market value ratios.

The current ratio is measured as:

• A) current assets minus current liabilities.
• B) current assets divided by current liabilities.
• C) current liabilities minus inventory, divided by current assets.
• D) cash on hand divided by current liabilities.
• E) current liabilities divided by current assets.

The quick ratio is measured as:

• A) current assets divided by current liabilities.
• B) cash on hand plus current liabilities, divided by current assets.
• C) current liabilities divided by current assets, plus inventory.
• D) current assets minus inventory, divided by current liabilities.
• E) current assets minus inventory minus current liabilities

Ratios that measure a firm's financial leverage are known as ________ ratios.

• A) asset management
• B) long-term solvency
• C) short-term solvency
• D) profitability
• E) market value

The debt-equity ratio is measured as:

• A) total equity divided by long-term debt.
• B) total equity divided by total debt.
• C) total debt divided by total equity.
• D) long-term debt divided by total equity.
• E) total assets minus total debt, divided by total equity.

The equity multiplier is measured as total:

• A) equity divided by total assets.
• B) equity plus total debt.
• C) assets minus total equity, divided by total assets.
• D) assets plus total equity, divided by total debt.
• E) assets divided by total equity.

Ratios that measure how efficiently a firm uses its assets to generate sales are known as ________ ratios.

• A) asset management
• B) long-term solvency
• C) short-term solvency
• D) profitability
• E) market value