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WGU D076 Pre-Assessment |44 questions with verified answers

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(also called efficiency ratios) measure how well the company uses its assets to generate sales or cash—the firm's operational efficiency and profitability. Ans-Activity ratios A company currently has a ratio of 1.5 but hopes to improve the ratio to 2 to align more with the industry benchmark. To achieve this goal, costs were cut in production through an investment in efficient equipment, and the company achieved a higher profit margin. If this continues, you are certain that the firm will achieve its goal in two years. What is this an example of? Ans-Progress measurement A firm has paid off its short-term loans more quickly in the past couple of years. What might this trend indicate about the firm's financial ratios? Ans-Its liquidity ratio is increasing. An investment analyst is concerned about a construction company's ability to sell its inventory to meet current obligations, because much of the inventory (commercial buildings) it builds and sells takes longer than a year to construct. Which ratio should this analyst use to consider the effect of the firm's inventory on the firm's ability to meet current obligations? Ans-quick ratio

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WGU D076 Pre-Assessment |44 questions with
verified answers
(also called efficiency ratios) measure how well the company uses its assets to
generate sales or cash—the firm's operational efficiency and profitability.
Ans✓✓✓-Activity ratios


A company currently has a ratio of 1.5 but hopes to improve the ratio to 2 to align
more with the industry benchmark. To achieve this goal, costs were cut in
production through an investment in efficient equipment, and the company
achieved a higher profit margin. If this continues, you are certain that the firm will
achieve its goal in two years. What is this an example of? Ans✓✓✓-Progress
measurement


A firm has paid off its short-term loans more quickly in the past couple of years.
What might this trend indicate about the firm's financial ratios? Ans✓✓✓-Its
liquidity ratio is increasing.


An investment analyst is concerned about a construction company's ability to sell
its inventory to meet current obligations, because much of the inventory
(commercial buildings) it builds and sells takes longer than a year to construct.
Which ratio should this analyst use to consider the effect of the firm's inventory
on the firm's ability to meet current obligations? Ans✓✓✓-quick ratio


An investment analyst is concerned about a construction company's ability to sell
its inventory to meet current obligations, because much of the inventory
(commercial buildings) it builds and sells takes longer than a year to construct.
Which ratio should this analyst use to consider the effect of the firm's inventory
on the firm's ability to meet current obligations? Ans✓✓✓-Quick ratio

, Another name for debt or liability Ans✓✓✓-Leverage


are used to evaluate the current share price of a public firm's stock. Ans✓✓✓-
Market ratios


As an active investor, Maria is analyzing her portfolio to decide if there are any
stocks she should remove from her pool of financial securities. A company she has
invested in, Quiet Flag Industries, just released its annual report.
Which kind of method should Maria use to see if the company has improved?
Ans✓✓✓-Trend analysis


Comparing a firm's financial ratios to other firms' ratios or industry averages.
Ans✓✓✓-Cross-sectional Analysis


Comparing a firm's ratios across time. Ans✓✓✓-Trend Analysis


consider how the firm is financed. Ans✓✓✓-Leverage ratios


For what purpose are market ratios used? Ans✓✓✓-To evaluate the current
share price of a public firm's stock


helps analyze where changes in return on equity come from. Ans✓✓✓-The
DuPont framework

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