Quiz Ch 04 – Actions to Improve a Firm’s Current Ratio
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What action could potentially enhance a firm’s current ratio if it is currently below 1.0?
What action could potentially enhance a firm’s current ratio if it is currently below 1.0?
Under what circumstances will ROE be equal to ROC?
How does the difference in total debt to total capital ratio between Companies HD and LD impact their Return on Equity (ROE), given their identical financial characteristics and financing structure?
Which of the following statements about financial ratios, their implications, and decision-making is correct?
How would short-term borrowing and holding the funds in cash accounts affect the current ratios of Safeco and Risco, considering their current assets and liabilities?
What does it signify when a firm’s cash coverage ratio is greater than its times interest earned ratio?
True or false: If a firm aims to sustain a particular TIE ratio, and possesses data on its debt, debt interest rate, tax rate, and operating expenses, it can compute the necessary sales volume to attain its desired TIE ratio.
True or false: While Firm A may have a higher current ratio than Firm B, Firm B could still have a higher quick ratio than A. However, if A’s quick ratio surpasses B’s, it’s definite that A’s current ratio is also greater than B’s.
True or false: Given a firm’s ROE of 9% and ROA of 6%, with financing limited to short-term debt, long-term debt, and common equity, where assets match total invested capital, the total debt to total capital ratio must be 50%.
True or false: When a firm’s ROE stands at 9% and its ROA at 6%, the equity multiplier must be 1.5.