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31. Asset
management ratios do not measure which of the following:
a. productivity of fixed assets in terms of sales
b. how current assets are used in the generation
of sales
c. how efficiently inventory is being managed
d. all of the above are measured by asset
management ratios
32. Which of the following statements is most
correct?
a. higher
levels of fixed costs result in lower levels of operating leverage.
b. higher
variable costs result in larger contribution margin.
c. higher
fixed costs result in larger break-even quantity.
d. each
of the above statements is false.
33. Which of the following statements is most
correct?
a. larger
values of the equity multiplier imply a greater use of leverage by the firm.
b. the
receivables turnover is computed by dividing annual sales by the year-end
accounts receivables.
c. the
operating return on assets is computed as the earnings before interest and
taxes divided by total assets.
d. all
the above statements are correct.
34. Which of the following statements is false?
a. time
series analysis evaluates a firm’s performance over time.
b. industry
comparative analysis compares a firm’s ratios against average ratios against
average ratios for other companies in the industry.
c. the
average collection period is calculated as the year-end accounts receivable
divided by the net sales.
d. all
the above statements are correct.
35. Which of the following statements is false?
a. the
price-to-book ratio measures the market’s value of the firm relative to balance
sheet equity.
b. the
equity multiplier ratio is calculated as owners’ equity divided by total
assets.
c. the
degree of operating leverage measures the sensitivity of operating income to
changes in the level of output.
d. all
the above statements are correct.
36. Which of the following would not be considered
in the fixed charge coverage ratio?
a. sinking fund payments
b. dividend payments
c. lease payments
d. all
the above are considered in the fixed charge coverage ratio
37. All other things being equal, an increase in
the amount of debt for a firm would:
a. increase the degree of operating leverage
b. decrease the degree of operating leverage
c. have no impact on degree of operating leverage
d. not enough information given
38. A firm with total liabilities and owners’
equity of $100,000 and net sales of $50,000 would have a total asset turnover
of:
a. 100
b. .50
c. 2
d. not enough information given
39. If a firm has a receivables turnover of 12, on
average, which of the following would be the firm’s average collection period?
a. 12 months
b. 1 month
c. 8.67
d. not enough information given
40. Which of the following might be a source of
industry information?
a. Dun and Bradstreet
b. Risk Management Association
c. the Federal Trade Commission
d. none of the above