Quiz Ch 04 – T/F Categorizing Profitability Ratios
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
True or false: Both return on assets and return on equity are categorized as profitability ratios.
True or false: Both return on assets and return on equity are categorized as profitability ratios.
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: EVA is the firm’s adjusted net profit, accounting for the cost of capital.
True or false: The net working capital of a company will decline when outstanding supplier bills are settled with cash.
True or false: To increase a firm’s ROE, leverage must be also increased.