If an Analyst's Goal Is to Determine How Effectively a Firm

question 68

Multiple Choice

If an analyst's goal is to determine how effectively a firm is managing its assets, which of the following sets of ratios would s/he examine?

• A) profit margin, current ratio, fixed charge coverage ratio
• B) quick ratio, debt ratio, time interest earned
• C) inventory turnover ratio, days sales outstanding, fixed asset turnover ratio
• D) total assets turnover ratio, price earnings ratio, return on total assets
• E) time interest earned, profit margin, fixed asset turnover ratio

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Definitions:

Incentive Value

The attractiveness or desirability of a reward or outcome, influencing motivation and behavior.

Set-point Theory

The theory that suggests body weight is regulated at a predetermined, or preferred, level by a feedback control mechanism.

Hedonic Adaptation

The observed process of becoming accustomed to a new situation or stimulus, causing the emotional effects of that stimulus to diminish over time.

Fancy Dinner

An elaborate or formal evening meal, often involving multiple courses and sophisticated cuisine.