MGT 8803 CORE TIPS 2027 ANSWERS AND
QUESTIONS SET A+
Current Ratio - ✔✔current assets/current liabilities
✔✔Quick Ratio (Acid Test) - ✔✔(Current Assets - Inventory) / Current Liabilities or
(Cash + Marketable Securities + Receivables)/Current Liabilities
✔✔Debt Ratio - ✔✔total liabilities/total assets
✔✔Interest Coverage Ratio - ✔✔EBIT/ interest expense
✔✔Inventory Turnover Ratio - ✔✔cost of goods sold/average inventory
✔✔Asset Turnover Ratio - ✔✔net sales/average total assets
✔✔Profit Margin Ratio - ✔✔net income/net sales
✔✔Return on Assets Ratio - ✔✔net income/average total assets
✔✔Return on Equity Ratio - ✔✔Net Income / Average Stockholders' Equity
✔✔Gross Margin Ratio - ✔✔(Net Sales - Cost of Goods Sold) / Net Sales
✔✔Debt to Equity Ratio - ✔✔total liabilities/stockholders equity
✔✔Financial Leverage Ratio - ✔✔Average Total Assets / Average Shareholders' Equity
✔✔Ending Stockholder's Equity - ✔✔beginning stockholder's equity + revenues -
expenses - dividends
✔✔Percentage of Credit Sales Method - ✔✔Bases bad debt expenses on the historical
percentage of credit sales that result in bad debts. Ex. 2% of $500,000 = $10,000
QUESTIONS SET A+
Current Ratio - ✔✔current assets/current liabilities
✔✔Quick Ratio (Acid Test) - ✔✔(Current Assets - Inventory) / Current Liabilities or
(Cash + Marketable Securities + Receivables)/Current Liabilities
✔✔Debt Ratio - ✔✔total liabilities/total assets
✔✔Interest Coverage Ratio - ✔✔EBIT/ interest expense
✔✔Inventory Turnover Ratio - ✔✔cost of goods sold/average inventory
✔✔Asset Turnover Ratio - ✔✔net sales/average total assets
✔✔Profit Margin Ratio - ✔✔net income/net sales
✔✔Return on Assets Ratio - ✔✔net income/average total assets
✔✔Return on Equity Ratio - ✔✔Net Income / Average Stockholders' Equity
✔✔Gross Margin Ratio - ✔✔(Net Sales - Cost of Goods Sold) / Net Sales
✔✔Debt to Equity Ratio - ✔✔total liabilities/stockholders equity
✔✔Financial Leverage Ratio - ✔✔Average Total Assets / Average Shareholders' Equity
✔✔Ending Stockholder's Equity - ✔✔beginning stockholder's equity + revenues -
expenses - dividends
✔✔Percentage of Credit Sales Method - ✔✔Bases bad debt expenses on the historical
percentage of credit sales that result in bad debts. Ex. 2% of $500,000 = $10,000
