AGEC 431 Exam 1 questions well
answered already passed
Liquidity - correct answer ✔✔Can we make required payments? current ratio and quick ratio
Asset mgt. - correct answer ✔✔Right amount of assets vs. sales? (also called efficiency ratios)
turnover ratio. focus primarily on how effectively the firm uses its assets to generate revenue.
Debt mgt. - correct answer ✔✔measure the amount of debt the firm uses- capital ratio
Profitability - correct answer ✔✔Do sales prices exceed unit costs, and are sales high enough as
reflected in PM, ROE, and ROA
Market values - correct answer ✔✔Do investors like what they see as reflected in P/E and M/B
ratios?
current ratio - correct answer ✔✔current assets/current liabilities
expressed as x "times"
inventory turnover ratio - correct answer ✔✔cost of goods sold / inventories
expressed as x "times"
total assets turnover ratio - correct answer ✔✔sales / total assets expressed as x "times"
, debt ratio - correct answer ✔✔total debt / total assets
expressed as a %
profit margin - correct answer ✔✔net income / sales
expressed as %
ROA - correct answer ✔✔net income / total assets
expressed as %
ROE - correct answer ✔✔net income / common equity
expressed as %
P/E ratio - correct answer ✔✔price per share/earnings per share
expressed as x "times"
for profitability, ROE should - correct answer ✔✔increase is better
for debt management - correct answer ✔✔capital ratio or tie ratio. should decrease, an
increase means they are more risky with managing their debt. if increases firm finds it more
difficult to borrow
for PE ratio - correct answer ✔✔an increase means the market is happy with the stock
answered already passed
Liquidity - correct answer ✔✔Can we make required payments? current ratio and quick ratio
Asset mgt. - correct answer ✔✔Right amount of assets vs. sales? (also called efficiency ratios)
turnover ratio. focus primarily on how effectively the firm uses its assets to generate revenue.
Debt mgt. - correct answer ✔✔measure the amount of debt the firm uses- capital ratio
Profitability - correct answer ✔✔Do sales prices exceed unit costs, and are sales high enough as
reflected in PM, ROE, and ROA
Market values - correct answer ✔✔Do investors like what they see as reflected in P/E and M/B
ratios?
current ratio - correct answer ✔✔current assets/current liabilities
expressed as x "times"
inventory turnover ratio - correct answer ✔✔cost of goods sold / inventories
expressed as x "times"
total assets turnover ratio - correct answer ✔✔sales / total assets expressed as x "times"
, debt ratio - correct answer ✔✔total debt / total assets
expressed as a %
profit margin - correct answer ✔✔net income / sales
expressed as %
ROA - correct answer ✔✔net income / total assets
expressed as %
ROE - correct answer ✔✔net income / common equity
expressed as %
P/E ratio - correct answer ✔✔price per share/earnings per share
expressed as x "times"
for profitability, ROE should - correct answer ✔✔increase is better
for debt management - correct answer ✔✔capital ratio or tie ratio. should decrease, an
increase means they are more risky with managing their debt. if increases firm finds it more
difficult to borrow
for PE ratio - correct answer ✔✔an increase means the market is happy with the stock
