What does a higher total asset turnover ratio indicate?
Answer Choices:
Lower efficiency
Greater efficiency
Higher debt
Answer: Greater efficiency
Why might Our Play’s fixed asset turnover be lower than Like Games’s?
Answer Choices:
Our Play has higher sales
Our Play is a newer company with newer assets
Our Play has less debt
Answer: Our Play is a newer company with newer assets
Franklin Aerospace is holding how much inventory relative to the industry?
Answer Choices:
More inventory per dollar of sales
Less inventory per dollar of sales
Answer: More inventory per dollar of sales
Between Like Games and Our Play, who collects cash faster?
Answer Choices:
Like Games
Our Play
Both are equally fast
Answer: Like Games
A company with one key customer is considered:
Answer Choices:
Less risky
More risky
Answer: More risky
Which of the following asset classes is generally considered to be the least liquid?
Answer Choices:
Cash
Accounts receivable
Inventories
Answer: Inventories
A current ratio of 1 indicates what?
Answer Choices:
The book value of the company’s current assets is equal to the book value of its current liabilities
The company has no short-term obligations
The company is highly liquid
Answer: The book value of the company’s current assets is equal to the book value of its current liabilities
A trend analysis compares:
Answer Choices:
One company to others
Company’s ratios over time
Ratios by product
Answer: Company’s ratios over time
What does declining inventory turnover often indicate?
Answer Choices:
Better inventory efficiency
Worse performance
Answer: Better inventory efficiency (if due to improved inventory system)
If a company has a quick ratio < 1 but current ratio > 1 and a large difference between the two, what does this indicate?
Answer Choices:
The company depends heavily on inventory to meet short-term obligations
The company is highly efficient
The company holds excess cash
Answer: The company depends heavily on inventory to meet short-term obligations