5 Written Questions

1. earnings before interst, tax, depreciation, amortization
2. indication of future growth in earnings compared to current EPS
3. the ------ inventory turnover, the more efficient the company is
4. measures value added since the inception of the company
5. measures how efficiently assets are used to generate earnings

4 Matching Questions

1. Current Ratio, Quick Ratio
2. Total Asset Turnover
3. Higher
4. Lower

1. a measures the utilization of the company's total assets
2. b the ------ the current ratio, the more capable a company is of paying off short term obligations
3. c to assess liquidity risk, use the ----------- when the inventory turnover is high, and use the ------------ when the inventory turnover is low
4. d the lower the days sales in inventory, the more efficient

5 Multiple Choice Questions

1. the ----- the fixed asset turnover, the more utilization
   1. Higher
   2. EBITDA
   3. EBIT
   4. Lower
2. portion of debt relative to assets, greater than one, a company has more debt relative to assets
   1. Current Ratio
   2. Quick Ratio
   3. Debt Ratio
   4. Leverage
3. number of days it takes to sell the inventory
   1. Days Sales Outstanding
   2. Days Sales In Inventory
   3. Cash Coverage
   4. Return on Equity
4. the ------- the number of days sales outstanding, the more efficient
   1. Higher
   2. Lower
   3. EBIT
   4. Leverage
5. the amount of debt used to finance its assets, this is high when more debt is used to cover than equity because they can invest in business operations without using equity
   1. Debt Ratio
   2. Leverage
   3. EBIT
   4. Lower

5 True/False Questions

1. Times Interest Earned → measures ability to cover interest charges using operating profit

   True        False

2. Days Sales Outstanding → number of days it takes to sell the inventory

   True        False

3. Current Ratio → measures the company's ability to meet short-term obligations with current assets

   True        False

4. Higher → the lower the days sales in inventory, the more efficient

   True        False

5. Quick Ratio → portion of debt relative to assets, greater than one, a company has more debt relative to assets

   True        False