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Different accounting treatments require the analyst to adjust the data before comparing ratios.
2.
An analyst who is interested in a company's long-term solvency would most likely examine the:
A
3.
A
37 days.
44 days.
52 days.
RGB, Inc. has a gross profit of $45,000 on sales of $ 150,000. The balance sheet shows average total
assets of $75,000 with an average inventory balance of $ 1 5,000. RGB's total asset turnover and
inventory turnover are closest to: Asset turnover Inventory turnover
4.
A
5.
A
6.
A
numerator would decrease by a greater percentage than the denominator, resulting in a lower
current ratio.
denominator would decrease by a greater percentage than the numerator, resulting in a higher
current ratio.
numerator and denominator would decrease proportionally, leaving the current ratio unchanged.
7.
A company's quick ratio is 1.2. If inventory were purchased for cash, the:
A
numerator would decrease more than the denominator, resulting in a lower quick ratio.
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denominator would decrease more than the numerator, resulting in a higher current ratio.
numerator and denominator would decrease proportionally, leaving the current ratio unchanged.
All other things held constant, which of the following transactions will increase a firm's current ratio
if the ratio is greater than one?
8.
A
Accounts receivable are collected and the funds received are deposited in the firm's cash account.
Accounts payable are paid with funds from the cash account.
RGB, Inc.'s receivable turnover is ten times, the inventory turnover is five times, and the payables
turnover is nine times. RGB's cash conversion cycle is closest to:
9.
A
69 days.
104 days.
150 days.
RG B, Inc.'s income statement shows sales of $ 1 ,000, cost of goods sold of $400, pre-interest
operating expense of $300, and interest expense of $ 1 00. RGB's interest coverage ratio is closest to:
10.
A
2 times.
3 times.
4 times.
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