MIE 201 EXAM 5 NCSU PRACTICE
QUESTIONS WITH COMPLETE
SOLUTIONS
◉ profit margin
Answer: net income divided by sales
◉ return on assets
Answer: net income divided by assets
◉ return on equity
Answer: net income divided by owners' equity; also called return on
investment (ROI)
◉ asset utilization ratios
Answer: ratios that measure how well a firm uses its assets to
generate each $1 of sales
◉ receivables turnover
Answer: sales divided by accounts receivable
◉ total asset turnover
, Answer: sales divided by total assets
◉ liquidity ratios
Answer: ratios that measure the speed with which a company can
turn its assets into cash to meet short-term debt
◉ current ratio
Answer: current assets divided by current liabilities
◉ quick ratio (acid test)
Answer: a stringent measure of liquidity that eliminates inventory
◉ debt utilization ratios
Answer: ratios that measure how much depth an organization is
using relative to other sources of capital, such as owners equity
◉ debt to total assets ratio
Answer: a ratio indicating how much of the firm is financed by debt
and how much by owners' equity
◉ time interest earned ratio
Answer: operating income divided by interest expense
◉ per share data
QUESTIONS WITH COMPLETE
SOLUTIONS
◉ profit margin
Answer: net income divided by sales
◉ return on assets
Answer: net income divided by assets
◉ return on equity
Answer: net income divided by owners' equity; also called return on
investment (ROI)
◉ asset utilization ratios
Answer: ratios that measure how well a firm uses its assets to
generate each $1 of sales
◉ receivables turnover
Answer: sales divided by accounts receivable
◉ total asset turnover
, Answer: sales divided by total assets
◉ liquidity ratios
Answer: ratios that measure the speed with which a company can
turn its assets into cash to meet short-term debt
◉ current ratio
Answer: current assets divided by current liabilities
◉ quick ratio (acid test)
Answer: a stringent measure of liquidity that eliminates inventory
◉ debt utilization ratios
Answer: ratios that measure how much depth an organization is
using relative to other sources of capital, such as owners equity
◉ debt to total assets ratio
Answer: a ratio indicating how much of the firm is financed by debt
and how much by owners' equity
◉ time interest earned ratio
Answer: operating income divided by interest expense
◉ per share data
