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5 Written questions

5 Matching questions

  1. financial leverage
  2. invested capital
  3. Accounting
  4. internal benchmarking
  5. accrual method of accounting
  1. a revenues are recognized in the period during which goods are delivered and services rendered (used by pharmacies)
  2. b comparison of the present year's ratios with those fo rpast years identifies trends, it indicates whether the pharmacy's financial performance is improving or deteriorating
  3. c when the owner borrows funds needed to run the business and uses less capital (risky): this gets high when there is too much debt and little owner investment, financial crisis occurs, and it's a new pharmacy
  4. d a specialized language used to communicate financial statements
  5. e cash invested into the business by owners (common/capital stock)

5 Multiple choice questions

  1. Ratio measures how effectively all funds availableto the manager, both debt and equity, have been used. better indicator of manager's performance than ROE bc it considers all funds at teh manager's disposal, not just investements
  2. measure the firm's ability to pay its current debt as it comes due (Current ratio, quick ratio,accounts payable period)
  3. measures how efficiently assets are used- making the maximum use of available assets (accounts receivable collection period, inventory turnover, asset turnover)
  4. measures a business's ability to pay its long term debt payments- debt to equity- NCPA =66%, lenders prefer low debt-equity ratios: either debt/equity or liabilities/equity (financial leverage)
  5. sources abd uses statement or statement of changes in financial position: reflects cash changes during the operating cycle, shows how a pharmacy obtained cash and how it used cash

5 True/False questions

  1. list all the current assetsmeasures a business's ability to pay its long term debt payments- debt to equity- NCPA =66%, lenders prefer low debt-equity ratios: either debt/equity or liabilities/equity (financial leverage)

          

  2. current liabilitiesconsist of those debts that will come due during the current operating cycle of business (accounts payable, short term notes, accrued expenses, and current portion of long term debts)

          

  3. invested capital + retained earningstwo sources that owners equity arises from

          

  4. current or short-term payablethose that will be sold, consumed, or converted to cash within the current operating cycle of business (1 year)

          

  5. Cash methods of accountingrevenues are recognized in the period during which goods are delivered and services rendered (used by pharmacies)

          

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