Quiz Ch 04 – Recognizing the Acid-Test Ratio
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What is known as the acid-test ratio?
What is known as the acid-test ratio?
What does it indicate if the cash coverage ratio surpasses the times interest earned ratio?
True or false: The net working capital to total assets ratio consistently surpasses the current ratio.
True or false: The return on assets typically exceeds the return on equity.
True or false: The disparity between the current and quick ratios arises from the exclusion of inventory from current assets in the latter.
True or false: Excess inventory can result in a healthy current ratio and an unhealthy quick ratio.
True or false: Economic Value Added may not be an ideal measure for the financial performance of Hollywood movies due to their early profit generation.
True or false: Both the receivable turnover ratio and the asset turnover ratio are considered efficiency metrics.
True or false: Market value added is the result of subtracting a firm’s book value from the market value of its equity.
True or false: Market value added and economic value added are synonymous terms.