21. If a company has $30,000 debt and $60,000 equity, what is its debt to equity ratio? (enter your answer as a decimal and round to the nearest tenth, example x.x)
0.5
22. When is a high debt to equity ratio be positive for a company's financial health and share price?
- If the earnings growth that the borrowed money generates is HIGHER than the cost of borrowing it
- If the company does not borrow any money
- If the earnings growth that the borrowed money generates is LOWER than the cost of borrowing it
23. Which of the following statements is incorrect?
- The higher the debt-to-equity ratio, the more debt the company has on its balance sheet
- The higher the debt-to-equity ratio, the more profit the company has recorded
- The debt-to-equity ratio analyzes the relationship between total liabilities and total equity
- A high debt-to-equity ratio means the company has a lot of debt in relation to equity
24. True or False: Generally, a high AP turnover ratio indicates that you satisfy your accounts payable obligations quickly.
- True
- False
25. The Cash Flow Coverage Ratio measures _________.
- how well a company can pay its expenses
- how well a company converts sales to cash
- company solvency
- a company’s ability to pay its short-term obligations
26. The cash flow margin ratio demonstrates _________.
- how well a company produces cash from its total revenue
- how well a company converts sales to cash
- a company’s ability to pay its short-term obligations
- company solvency
27. DigiWidgit recorded operating cash flows totaling $152,000 and the total debt payable for the year was $77,000 What is their Cash Flow Coverage Ratio? (enter your answer as a decimal and round to the nearest hundredth, example x.xx)
1.97
28. Daryl's Delivery recorded current liabilities of $44,000 at the year’s start, current liabilities of $67,000 at year’s end, and Cash Flow from Operating Activities of $120,000. What is their Current Liability Coverage Ratio? (enter your answer as a decimal and round to the nearest hundredth, example x.xx)
2.16
29. Superior Suits recorded a cash flow from operations of $48,750 and net sales of $87,000. What is their Operating Cash Flow Margin ratio? (enter your answer as a decimal and round to the nearest hundredth, example x.xx)
0.56