Financial Ratios Quiz

Financial Ratios Quiz

University

25 Qs

quiz-placeholder

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Financial Ratios Quiz

Financial Ratios Quiz

Assessment

Quiz

Mathematics

University

Practice Problem

Hard

Created by

Karush Singla

FREE Resource

25 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

Which of the following ratios primarily indicates a company's ability to pay off its short-term liabilities with its most liquid assets?

Debt-to-Equity Ratio

Current Ratio

Return on Equity (ROE)

Gross Profit Margin

2.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

If a company has a Quick Ratio of 0.8, which of the following could be true?

The company has sufficient liquid assets to cover all short-term liabilities.

The company may face liquidity issues, as it has less than $1 in liquid assets for every $1 of short-term liabilities.

The company has a very high degree of liquidity.

The company's inventory turnover is high.

3.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

A company's Return on Equity (ROE) is 15%, and its Return on Assets (ROA) is 5%. Which of the following conclusions can be drawn from this information?

The company has low financial leverage.

The company is not generating enough profit.

The company is likely using high financial leverage.

The company's equity base is too large.

4.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

Which ratio would best indicate the efficiency of a company's inventory management?

Debt-to-Equity Ratio

Gross Profit Margin

Inventory Turnover Ratio

Quick Ratio

5.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

Which of the following would likely lead to a higher-quality earnings report?

Aggressive recognition of revenue on future sales.

Reduced cash flow from operations.

High correlation between net income and cash flow from operations.

Significant increase in accounts receivable.

6.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

Which of the following is most likely to cause a company's Price-to-Earnings (P/E) ratio to increase, assuming no changes in net income?

Increase in share price.

Increase in number of outstanding shares.

Increase in cash flow from operations.

Decrease in revenue.

7.

MULTIPLE CHOICE QUESTION

10 sec • 1 pt

If a company's Debt-to-Equity ratio is 2.0, which of the following is true?

The company is highly leveraged, with twice as much debt as equity.

The company has low leverage, relying mainly on equity.

The company has an equal balance of debt and equity.

The company has minimal debt relative to its equity.

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