PEREGRINE FINANCE MAIN EXAM SCRIPT 2025 QUESTIONS
WITH SOLUTIONS GUARANTEE A+
✔✔The __________ __________, one of the most commonly cited financial ratios,
measures the firm's ability to meet its short-term obligations. It is defined as current
assets divided by current liabilities. - ✔✔current ratio
✔✔__________ __________ provides a measure of how quickly a firm sells its goods. -
✔✔Inventory turnover
✔✔Inventory turnover can easily be converted into a(n) __________ __________
__________ __________ by dividing the turnover figure into 365 (the number of days in
a year). - ✔✔average age of inventory
✔✔Firms use the __________ __________ __________ or __________ __________
__________ __________ __________ in evaluating credit and collection policies. -
✔✔average collection period, average age of accounts receivable
✔✔Firms use the __________ __________ __________ to evaluate their payment
performance. This metric measures the average length of time it takes a firm to pay its
suppliers. - ✔✔average payment period
✔✔The __________ __________ __________ __________ measures the efficiency
with which a firm uses its fixed assets. The ratio tells analysts how many dollars of sales
a firm generates per dollar of investment in fixed assets. - ✔✔fixed asset turnover ratio
✔✔The __________ __________ __________ __________ indicates the efficiency
with which a firm uses all its assets to generate sales. - ✔✔total asset turnover ratio
✔✔__________ __________ focus on income statement measures of a firm's ability to
generate sufficient cash flow to make scheduled interest and principal payments. -
✔✔Coverage ratios
✔✔__________ __________ measure the proportion of total assets financed by a firm's
creditors. The higher this ratio, the greater is the firm's reliance on borrowed money to
finance its activities. - ✔✔Debt ratios
✔✔A close cousin of the debt ratio is the __________-__________-__________
__________, sometimes called the __________ __________. This ratio is calculated as
total assets divided by common stock equity. - ✔✔assets-to-equity ratio, equity
multiplier
, ✔✔A high equity multiplier indicates __________ debt and __________ equity,
whereas a low equity multiplier indicates __________ debt and __________ equity. -
✔✔(1) high, low
(2) low, high
✔✔A measure that focuses solely on a firm's long-term debt is the __________-
__________-__________ __________. It is calculated as long-term debt divided by
stockholders' equity. - ✔✔debt-to-equity ratio
✔✔Both the debt ratio and the debt-to-equity ratio use __________ __________ of
debt, equity, and assets. - ✔✔book values
✔✔The __________ __________ __________ __________ measures a firm's ability to
make contractual interest payments. It equals earnings before interest and taxes divided
by interest expense. A higher ratio indicates a greater capacity to meet scheduled
payments. - ✔✔times interest earned ratio
✔✔The __________ __________ __________ measures the percentage of each sales
dollar remaining after a firm has paid for its goods. - ✔✔gross profit margin
✔✔The __________ __________ __________ measures the percentage of each sales
dollar remaining after deducting all costs and expenses including interest, taxes, and
preferred stock dividends. These vary widely across industries, so comparing a
company's figure to industry averages is an important part of the performance analysis.
- ✔✔net profit margin
✔✔__________ __________ __________ is probably the most closely watched
financial ratio, which the investing public considers to be a primary indicator of corporate
success. These represent the number of dollars earned on behalf of each outstanding
share of common stock during the period. - ✔✔Earnings per share
✔✔__________ __________ __________ __________, often called __________
__________ __________, measures management's overall effectiveness in using a
firm's assets to generate returns to common stockholders. - ✔✔Return on total assets,
return on investment
✔✔__________ __________ __________ __________, captures the return earned on
the common stockholders' (owners') investment in a firm. - ✔✔return on common equity
✔✔The __________/__________ __________ measures the amount investors are
currently willing to pay for each dollar of the firm's current earnings. - ✔✔price/earnings
ratio
WITH SOLUTIONS GUARANTEE A+
✔✔The __________ __________, one of the most commonly cited financial ratios,
measures the firm's ability to meet its short-term obligations. It is defined as current
assets divided by current liabilities. - ✔✔current ratio
✔✔__________ __________ provides a measure of how quickly a firm sells its goods. -
✔✔Inventory turnover
✔✔Inventory turnover can easily be converted into a(n) __________ __________
__________ __________ by dividing the turnover figure into 365 (the number of days in
a year). - ✔✔average age of inventory
✔✔Firms use the __________ __________ __________ or __________ __________
__________ __________ __________ in evaluating credit and collection policies. -
✔✔average collection period, average age of accounts receivable
✔✔Firms use the __________ __________ __________ to evaluate their payment
performance. This metric measures the average length of time it takes a firm to pay its
suppliers. - ✔✔average payment period
✔✔The __________ __________ __________ __________ measures the efficiency
with which a firm uses its fixed assets. The ratio tells analysts how many dollars of sales
a firm generates per dollar of investment in fixed assets. - ✔✔fixed asset turnover ratio
✔✔The __________ __________ __________ __________ indicates the efficiency
with which a firm uses all its assets to generate sales. - ✔✔total asset turnover ratio
✔✔__________ __________ focus on income statement measures of a firm's ability to
generate sufficient cash flow to make scheduled interest and principal payments. -
✔✔Coverage ratios
✔✔__________ __________ measure the proportion of total assets financed by a firm's
creditors. The higher this ratio, the greater is the firm's reliance on borrowed money to
finance its activities. - ✔✔Debt ratios
✔✔A close cousin of the debt ratio is the __________-__________-__________
__________, sometimes called the __________ __________. This ratio is calculated as
total assets divided by common stock equity. - ✔✔assets-to-equity ratio, equity
multiplier
, ✔✔A high equity multiplier indicates __________ debt and __________ equity,
whereas a low equity multiplier indicates __________ debt and __________ equity. -
✔✔(1) high, low
(2) low, high
✔✔A measure that focuses solely on a firm's long-term debt is the __________-
__________-__________ __________. It is calculated as long-term debt divided by
stockholders' equity. - ✔✔debt-to-equity ratio
✔✔Both the debt ratio and the debt-to-equity ratio use __________ __________ of
debt, equity, and assets. - ✔✔book values
✔✔The __________ __________ __________ __________ measures a firm's ability to
make contractual interest payments. It equals earnings before interest and taxes divided
by interest expense. A higher ratio indicates a greater capacity to meet scheduled
payments. - ✔✔times interest earned ratio
✔✔The __________ __________ __________ measures the percentage of each sales
dollar remaining after a firm has paid for its goods. - ✔✔gross profit margin
✔✔The __________ __________ __________ measures the percentage of each sales
dollar remaining after deducting all costs and expenses including interest, taxes, and
preferred stock dividends. These vary widely across industries, so comparing a
company's figure to industry averages is an important part of the performance analysis.
- ✔✔net profit margin
✔✔__________ __________ __________ is probably the most closely watched
financial ratio, which the investing public considers to be a primary indicator of corporate
success. These represent the number of dollars earned on behalf of each outstanding
share of common stock during the period. - ✔✔Earnings per share
✔✔__________ __________ __________ __________, often called __________
__________ __________, measures management's overall effectiveness in using a
firm's assets to generate returns to common stockholders. - ✔✔Return on total assets,
return on investment
✔✔__________ __________ __________ __________, captures the return earned on
the common stockholders' (owners') investment in a firm. - ✔✔return on common equity
✔✔The __________/__________ __________ measures the amount investors are
currently willing to pay for each dollar of the firm's current earnings. - ✔✔price/earnings
ratio
