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NEW QUESTION: 1
If a firm's ratio of "current assets to current liabilities" is lower than the industry average and its ratio of "long-term debt to shareholder's equity" is lower than the industry average, it would most likely indicate that the firm:
A. has more leased assets than the industry average.
B. has more current liabilities than the industry average.
C. will be less profitable than the industry average.
Answer: B
Explanation:
A firm's liquidity can be measured by the long term debt to capital ratio = total long term debt
/ total long term capital, if a firm has a higher ratio than the industry it is taking on more debt than the average. Another measurement of a firm's liquidity is the current ratio = current assets / current liabilities, if a firm has a low current ratio it is taking on more debt. Long term debt to shareholders equity is measured by using the debt to equity ratio, a higher percentage means that the firm is indeed taking on more debt than the industry.
NEW QUESTION: 2
Answer:
Explanation:
Topic 5, Mixed Questions
NEW QUESTION: 3
Answer:
Explanation:
