D775 D775 - ASSESSMENT STUDY GUIDE PART 2 UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

D775 (Tough PA Questions for Me) ACTUAL QUESTIONS AND CORRECT ANSWERS



What does a high average collection period indicate?
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A. A slow conversion of receivable cash
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B. A slight increase to already strong liquidity
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C. An increase in high total asset turnover and high fixed asset turnover
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D. A decreasing market value as measured by a decreasing P/E ratio - ANS>>A. A slow
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conversion of recievable to cash
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What does a high current ratio suggest about a company's financial health?
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A. Strong liquidity
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B. Weak liquidity
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C. Average asset usage
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D. Poor asset usage - ANS>>A. Strong liquidity B
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What does a high accounts receivable turnover rate indicate?
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A. Frequent receivable collection
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B. Delayed cash collection
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C. Low turnover ratio
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D. Increased inventory costs - ANS>>A. Frequent receivable collection B
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What does a high debt to assets ratio suggest?
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A. Conservative financial strategy
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