The cost to maturity of existing bonds reflects the rate of return required by the market. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
If the only information you are given about Ryan Corporation, a large public company in business for many years, is that it has a current ratio of 2.9, what could you infer from this? A) It can meet the short-term obligations without any difficulty. B) You could determine that Ryan has a liquidity problem because […]
Date: September 19th, 2020
The purpose of the restrictive debt covenant that limits the distribution of profits to shareholders is to ________. A) assure the lender that additional borrowing is constrained or may be subordinated to the original loan B) limit the amount of fixed-payment obligations C) ensure a cash shortage does not cause an inability to meet current […]
Date: September 19th, 2020
Which of the following is true of current ratio? A) The more predictable a firm’s cash flows, the higher the acceptable current ratio. B) A higher current ratio indicates a higher return on equity. C) The more predictable a firm’s current ratio, the higher the current liabilities. D) A higher current ratio indicates a greater […]
Date: September 19th, 2020
Which of the following is excluded when calculating quick ratio? A) accounts receivable B) accounts payable C) cash D) inventory ANSWER D
Date: September 19th, 2020
An example of a standard debt provision is to ________. A) limit the corporation’s annual cash dividend payments B) pay taxes and other liabilities when due C) restrict the corporation from disposing of fixed assets D) maintain a minimum level of liquidity ANSWER B
Date: September 19th, 2020
The weighted average cost of capital represents the annual before-tax percentage cost of the debt. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
________ ratios are a measure of the speed with which various accounts are converted into sales or cash. A) Activity B) Liquidity C) Debt D) Profitability ANSWER A
Date: September 19th, 2020
The two basic measures of liquidity are ________. A) inventory turnover and current ratio B) current ratio and quick ratio C) gross profit margin and ROE D) current ratio and total asset turnover ANSWER B
Date: September 19th, 2020
The net proceeds used in calculation of the cost of long-term debt are funds actually received from the sale after paying for flotation costs and taxes. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
