Which of the Following Would Indicate an Improvement in a Company's

question 19

Multiple Choice

Which of the following would indicate an improvement in a company's financial position, holding other things constant?

• A) The current and quick ratios both increase.
• B) The inventory and total assets turnover ratios both decline.
• C) The debt ratio increases.
• D) The profit margin declines.
• E) The EBITDA coverage ratio declines.

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Definitions:

Goodwill

The value attributed to a company's brand name, customer relationships, and other intangible assets that are not separately identifiable.

Liabilities

are present financial obligations arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits.

Tax Rate

The percentage at which an individual or corporation is taxed.

Marketable Securities

These are liquid financial instruments that can be quickly converted into cash at market value, such as stocks, bonds, or Treasury bills.