A Company Has Current Assets of $80,000,long-Term Assets of $150,000,current

question 189

Multiple Choice

A company has current assets of $80,000,long-term assets of $150,000,current liabilities of $40,000,and long-term liabilities of $40,000.The current ratio is:

• A).80.
• B)1.33.
• C)2.00.
• D)2.33.

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Definitions:

Financial Leverage

The use of borrowed money (debt) to amplify the potential returns from an investment.

EBIT-EPS Analysis

A tool used to determine the impact of different levels of debt on a company's earnings before interest and tax (EBIT) and earnings per share (EPS).

Leverage

The use of borrowed funds to finance the purchase of assets or increase the potential return of an investment.

Management Effectiveness

A measure of how well a company's management team utilizes resources to generate profits.