### financial ratios

relationships ddetermind from a firms financial information and used for comparison purposes are known as

### equity multiplier

the ratio which includes all debts of all maturities to all creditors is called the

### times interest earned ratio

the financial ratio which is defined as earnings before interest and taxes divided byinterest paid is called the

### the cash coverage ratio is defined

as earnings before intrest and taxes plus depreciation divided by interest paid

### asset utilisation ratios are defined as those ratios which measure how efficiently a firm uses its

assets to generate sales

### the number of times a firm collects their outstanding credit accounts and reloans the money in one year is called the

receivables turnover

### the ratio related to the amount of profit a firm earns for every $1 in sales is called the

profit margin

### the financial ratio measured as net income divided by total assets is known as a firms

return on assets

### the ratios which involve the current price of one share of a firms common stock are referred to as

market value measures

### the relationship between a firms earnings and the multiple of those earnings which investors are willing to pay to purchase one share of stock is called the

price-earnings ratio

### market to book ratio

the relationship between current selling price of a chare of stock and the related accounting value f that share is called the

### dividend payout ratio

the percentage of a cirms net income that is distirbuted to shareholders is called the

### retention ratio

the percentage of a firms net income which is transferred into retained earnings is known as the

### the internal growth rate is best described as the _______ growth rate achievable

maximum, w/o external financing of any king

### the sustainable growth rate is described as the ______ growth rate achievable

maximum. w/o using any exxternal equity financing while maintaing a constant debt-eequity ratio

### when a financial analyst compares the current ratio and the profit margin of a firm over a serioes of years, the analyst is condicting a type of analysis known as

time-trend analysis

### firms w similiar assets operations, and markets

a peer group analysis is best defined as a comparison of

### Standard Industrial Classification SIC system

the us government coding system that classifies firms by their specific tpype of business operation

### long term debt account to decrease

Baker and SOns is issuing more shares of common stock and purchasing equipment with the procedes of the sotckc offering. on the common size balance sheet of the firm, the transaction will cause the percentage value for the

### which of the following is correct concerning the percentages found on a common size income statement

the cost of goods sold percentage should remain relatively constant over time unless the wholesale or retail proce of a fims inventory changes

### which one of the following actions will INCREASE THE CURRENT RATIO, all else constant

the payment of inventory using short term credit

### a current ratio less than 1.0 means that a firm presently has

more debts due within the next eyar than assets that should convert to cash within that same time period

### A firm has positive net working capital and carries inventory. all else constant, the quick ratio of this firm will

always be less than the current ratio, but greater than the cash ratio

### the cash ratio tells you, in terms of years, how long a firm can

pay its bills w/o receiving any more cash

### which of the following are classified as financial leverage measures??

cash coverage ratio and return on equity II and III

### all else constant, a firm will lower its total debt ratio when it

retains all of its net profits w/o obtaining any external financing

### a firm has a times interest earned ratio of 2, this means that the firm has twice as much

earnings before interst and taxes as it does interest expense

### when a firm increases its inventory turnover rate, it has to be

selling its inventory in less days, regardless of the level of total sales for the year

### a firm has a days sales in inventory of 18, this means that the firm

has sufficient inventory to support sales for 18 days

### if a manager notices that the firms receivables turnover rate is declining, he or she should assume that

on average it is taking each customers longer to pay for their purchases

### which are correct formulas for computing the RETURN ON ASSETS

NI / total assets and profit margin mult by the total asset turnover

### if the total assets of a firm increase while all other components of ROE remain unchanged, you would expect the firms

total asset turnover to decrease

### the earnings per share represent the maount of __________ per year per share of outstanding stock

net income

### which is true concerning the PRICE-EARNINGS RATIO

price earnings ratios are SENSITIVE to the accounting meethods employed by the firm

### a high price earnings ratio should best be interpreted to mean that a firm

currently provides less net income per dllar paid for one share of stock than most other firms

### the Du Pont identity is comprised of which of the three following

equity multiplier, profit margin, and total asset turnover

### which is a correct method of computing the Du Pont identity?

(profit margin)(1/capital intensity ratio)(equity multiplier)

### which will increase teh internal growth rate of a firm, all else constant

a decrease in teh amount of assets required to produce the same amount of net income

### if a firm has 100 percent dividend payout ratio, then the internal growth rate of the firm is

zero percent

### to achieve the maximum sustainable rate of growth, a firm must

maintain a constant debt-equity ratio

### the sustainable rate of growth exceeds the internal rate of growth because the

sustainable rate increases debt as teh firm increases its retained earnings, while the internal rate does not

### which concerning financial statement analysis is correct

the purchase of inventoryusing short term credit will decrease the current ratio