which of the following is a profitability ratio?

D. 1.14, D. 1.14 Which of the following ratios are used to evaluate a company's ability to pay long-term debts? C. The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages, but the increase in the selling and store operating costs percentage would decrease only the net profit margin percentage. Correct! What is the formula to compute the return on assets? Income from operations. D. Collecting an account receivable. Gross profit. a. Cash coverage ratio = 31.0 = (Cash flow from operating activities + Interest payments + Income tax payments) Interest payments = ($360,000 + $20,000 + $240,000) $20,000. 9. Operating profit ratio is a type of profitability ratio that is used for determining the operating profit and net revenue generated from the operations. Interest expense net of tax = $90,000 (1 - .4) = $54,000. 2. $$ A project's profitability index is equal to the ratio of the of a project's future cashflows to the project's . Click the card to flip Definition 1 / 23 c. 2.5 Click the card to flip Flashcards Learn Test Match Created by jennw1 One of the first strategies to help in increasing profitability is to meet with members of your team to establish common goals related to increasing profits. Current ratio. 10,00,000 investment. Here is a list of 17 strategies that may help you increase the profitability of businesses that you manage: 1. Times interest earned ratio = 18.0 = (Net income + Interest expense + Income tax expense) Interest expense = ($204,000 + $20,000 + $136,000) $20,000. 30% B. 1. B. D. 31.0. The ratio that uses weighted average common shares outstanding in the denominator is the (Points: 4) price-earnings ratio. $$ Which ratio reflects the stock market's assessment of a company's future performance? d. All of the above will likely affect the investor's decision. 1) profit margin 2) times interest earned 3) return on equity 4) return on assets (investment) 2 Answers 2 Source (s): accounting student Liquidity, debt mgt and profitability ratios are important. It provides information on a company's revenue as proportionate to it's cost. The records of Marshall Company include the following: C. Fixed asset turnover ratio. This problem has been solved! When considering an investment, which of the following is not one of the three critical factors used to evaluate future earnings potential of that investment? Current liabilities are $40,000. Manage Settings Allow Necessary Cookies & ContinueContinue with Recommended Cookies. Net income, $204,000 Recipes, Inc. had Sales of $120,000 and Cost of goods sold of $80,000 for the year. A project's profitability index is equal to the ratio of the of a project's future cashflows to the project's . 8. Facilitate team contributions. Income tax payments, $140,000 Cash flow from operating activities, $360,000 C. Short-term financial strength. The profit margin ratio is defined as ____ ____ divided by net sales. The operating cycle. Which term best describes a company having a suitable amount of cash or easily-convertible assets to pay incurred current liabilities? We and our partners use cookies to Store and/or access information on a device.We and our partners use data for Personalised ads and content, ad and content measurement, audience insights and product development.An example of data being processed may be a unique identifier stored in a cookie. A profitability ratio of 8.31 would mean that your business makes you $8,300 in profit per year. The inventory turnover ratio for Natural Foods Stores is 14.6. 12.0x C. 2.4x D. 5.0x a. D. Cash coverage ratio. It looks at the percentage of net income to revenue. 1.67 Facebook | Twitter | Pinterest | Instagram A profitability ratio of 5. roses to orchidsc. A. The _____-_____ ratio provides a more conservative measure of a company's ability to pay its current liabilities from current sources. Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income (profit) relative to revenue, balance sheet assets, operating costs, and shareholders' equity during a specific period of time. B. C. 35.4 How did the election of 182418241824 change the way presidents were selected? Calculate the following profitability ratios for 2024 and 2025: (Round your answers to 1 decimal place.) Net profit margin. B. Assignment 6 (a) Describe why an Investor would use Profitability Ratio's? Which of the following items are included in the numerator for the current ratio but are excluded from the numerator of the quick or acid-test ratio? Which of the following is not a profitability ratio? $$. However, they would like to change this and make the drink acceptable during other time periods during the day. Which of the following would not change the receivables turnover ratio for a retail company? Global event factors. Price/earnings ratio. Return on Investment (ROI): Profit margin. Can you explain this answer? 2 to 3b. Question: Which of the following ratios is a measure of profitability? Term 1 / 23 1. The group of ratios that measure the earnings or operating effectiveness of a company are referred to as ______ ratios. See the answer Which of the following is NOT considered a profitability ratio? $$ You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Contact for any suggestion, queries, claims and feedback. Steven purchases x dollars worth of stock on his broker's advice and pays his broker a flat $12 broker fee. D. 31.0 The ability of reported earnings to reflect the company's true earnings is referred to as: The profit margin measures the income earned. Which of the following is a ratio used to evaluate a company's solvency? A project's profitability index is equal to the ratio of the of a project's future cashflows to the project's . Mark should compare the company's performance to: Which of the following formulas is used in horizontal analysis to determine the percentage increase or decrease between two years? Answers: 1 on a question: which of the following is different from the others? Quick ratio = 1.14 = Quick assets Current liabilities = $240,000 $210,000. B. (i) Earning per share (ii) Return on investment (iii) Interest Coverage Ratio (iv) Gross Profit Ratioa)Only (i)b)Only (i) and (ii)c)Only (iii)d)Only (iii) and (iv)Correct answer is option 'C'. Calculate earnings per share. **Indicate whether the two sets are equal. Recipes' accounts receivables turnover equals: What is the formula to compute the average days in inventory? 4. net income by net sales. The return on assets ratio = 15.3%. 6,00,000 per year. And if you have shareholders, profitability ratios will show how well you use existing assets to generate profit and value for them, too. Marketable securities 40,000 What is the formula for the profit margin ratio? Profitability margins come in three flavors: Gross profit margin. What is the average amount of inventory for Natural Foods? Types of Profitability Ratio: 1. C. Return on assets. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued$5,000 in preferred dividends for the year. A place for buying and selling activities is called, The exchange value of a good service in terms of money is, Selling the same product at different prices is known as, The words used to convey the advertisement idea is, The social aspect of marketing is to ensure, The orange juice manufacturers know that orange juice is most often consumed in the mornings. Low inventory levels C. Rapid turnover of assets D. High profit margins B. Return on assets = Net income + interest expense net of tax Average total assets = ($480,000 + $54,000) $3,500,000 = 15.3%. Average days in inventory is calculated as 365 days divided by the. What is the pront margin ratio? Which information regarding the receivables turnover ratio is true? Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate earnings relative to its revenue, operating costs, balance sheet assets, or. The quick ratio is closest to: Which of the following is a profitability ratio? Times interest earned Profit margin Return on common stockholders' equity Payout ratio End of preview. Required fields are marked *. 10. d. The selection of the candidate with fewer electoral votes triggered the rise of party control over nominations. C. Net profit margin. 18.0 Longmont Corporation earned net income of $90,000 this year. The debt to equity ratio is calculated as, Return on assets is calculated as net income divided by. Which of the following ratios is not part of the DuPont model? Avoiding losses from long-term trend reversals is challenging, and trend-following is one of the few trading approaches to explore it. and act income is $60,000. b) In case of change in profit sharing ratio, for proportionate goodwill, debit gaining partners in gaining ratio and credit sacrificing partners in sacrificing ratio. D. Net sales. A. Therefore, E is correct. B. c.Inventory turnover ratio. What is the current ratio? What is the formula for the inventory turnover ratio? d.Debt-to-equity ratio. If a potential investor is analyzing three companies in the same industry and wishes to invest in only one, which ratio is least likely to affect the investor's decision? 58. We review their content and use your feedback to keep the quality high. B. Debt-to-equity. Many investors view this type of indicator as the number one measure of a company's success. Net profit margin is the mother of all profitability ratios and the one most commonly used by analysts. c. Increases in the cost incurred to purchase inventory. Working Capital Management refers to a Trade-off between _____________andProfitability. If team members are all aware of the goals of . gross profit by net sales. C. Net income. , and Some of our partners may process your data as a part of their legitimate business interest without asking for consent. Net sales are $200,000, cost of goods sold is $120.000. ** D. 17.7. Proprietary Ratio B. C. 21.2 9. $F=\{x: x$ is a natural number greater than $6\}$, A. Current liabilities are $40,000. The above ratios are extremely important to any company analysis because they cover a company's efficiency in earning money from its assets, equity, or reinvestment. Net sales are $200,000, cost of goods sold is $120.000. C. The higher the debt-to-equity ratio, the higher the potential return to the stockholders if return on assets (ROA) exceeds the after tax cost of interest. B. b.Asset turnover ratio. Following this election, presidents were directly elected. A discontinued operation is a business, or a component of business, that the organization. P(B_1 | A_3) = .10 14.9%. a. C. The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages, but the increase in the selling and store operating costs percentage would decrease only the net profit margin percentage. Profit margin ratio Return on equity ratio Inventory turnover ratio Earnings per share ratio This problem has been solved! D. Return on equity. Cost of goods sold 600,000 Many argue that the operating profit margin is the best ratio for determining management . What is the pront margin ratio? You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Which of the following is a Profitability Ratio? D. The cash coverage ratio compares the cash generated by a company to its cash obligations for the prior period. To view the purposes they believe they have legitimate interest for, or to object to this data processing use the vendor list link below. A. Quick assets = Cash $80,000 + Accounts receivable $120,000 + Marketable securities $40,000. What was Lee's times interest earned ratio? What is the numerator of the EPS calculation for Longmont? Which one of the following is a measure of profitability? What are the following ratios' measuring (i) Return on Assets, (ii) Return on Equity, (iii) Profit Margin. O A. D. Individual company factors. Vertical analysis is also commonly known as _______- size analysis. a. Common-size analysis b. Experts are tested by Chegg as specialists in their subject area. Liquidity ratios concentrate on: Profitability ratios measure your company's ability to earn a profit. 11. A company has total assets of $500,000 and noncurrent assets of $400,000. Use Bayes theorem to determine A Accounts receivable turnover B. the ratio 14.25comparesa. Net income, $306,000 Asset turnover. C. 15.3%. 50% C. 60% D. 75% 11. The ratio that uses weighted average common shares outstanding in the denominator is the (Points: 4) price-earnings ratio. Profit margin ratio = Net income. Profitability ratios indicate how efficiently a company generates profit and value for shareholders. 30% B. Interest cash payments, $20,000 A common-size balance sheet presents each line item as a percentage of ___ ____. See Answer Show transcribed image text Expert Answer Dividend yield ratio. Assume that American Health Systems can earn $6$ percent on the proceeds. Dec 07,2022 - Which of the following is False?a) Unless otherwise agreed, it firm is dissolved on the death of a partner. 8. Which of the following is a profitability ratio? Current liabilities = $210,000 = Accounts payable $70,000 + Current portion of long-term debt $140,000. A. A. To clarify its cause and suggest remedies, we thoroughly examine the effect . Prepaid rent expense 10,000 What is the current ratio? Profitability Ratios : Profitability r atios are a class of financial metrics that are used to assess a business's ability to generate earnings relative to its revenue, operating costs, balance sheet assets, or shareholders' equity over time, using data from a specific point in time. Test a hypothesis to determine if there is evidence to support this. There were no share issue costs. c. The election convinced many that the parties must adopt the king caucus as the primary method for selecting presidents. The value of the shares falls to f dollars months later, and Steven uses a broker who charges 1% commission to make the sale. The sum of cash, current investments, and accounts receivable divided by current liabilities equals the. net income by stockholders' equity. Net income=$4,580,000 -$4,100,000 = $480,000. 2003-2022 Chegg Inc. All rights reserved. Types of Profitability Ratio: 1. Trend analysis and time-series analysis refer to _____ analysis. Electoral College. Interest cash payments, $10,000 31.8 The return on assets is closest to: Multiple Choice Price-earnings ratio. B. 50% C. 60% D. 75% 11. The formula (current-year amount -- prior-year amount)/prior-year amount calculates the _______ used in horizontal analysis. Which of the following is a solvency ratio? This refers to the everyday operating expenses of running a business that are not included in the production of goods or delivery of services. 70 and fixed costs amount to Rs. 18.3%. $$. C. Industry factors. Profit margin is calculated by dividing (Points: 4) sales by cost of goods sold. A. B. Which of the following ratios is not considered to be a test of profitability? (Points: 4) Payout ratio Profit margin Times interest earned Return on common stockholders' equity. 1. Expert Answer 100% (1 rating) Previous question Next question Which ratio reveals how profitability of the owners funds have been utilized by the firm? Cash flow from operating activities, $240,000 B. Economy-wide factors. A firm has current assets of $150,000 and total assets of $750,000. Profitability ratios include: a) Gross profit ratio b) Net profit ratio c) Operating profit ratio d) All of the above 18. Income tax payments, $240,000 If you would like to change your settings or withdraw consent at any time, the link to do so is in our privacy policy accessible from our home page. Which of the following is the formula for the current ratio? A. ______ refers to a company's ability to pay its long-term liabilities. 6. Disclaimer: This is educational blog and don't claim any copyright material. If you were to perform a vertical analysis of this income statement, you would divide each of these income statement line items by, A common-size balance sheet will list each line item as a percentage of. A. Which of the following gains and losses would be included in other gains and losses in calculating income from continuing operations? A company has total assets of $500,000 and noncurrent assets of $400,000. A. The debt-to-equity ratio shows the relative proportion of total assets financed by debt. B. Question: Which of the following is NOT considered a profitability ratio? The profit margin is calculated by dividing, An item that requires separate disclosure on the income statement after income from continuing operations is. Which of the following is not a profitability ratio? During 2015, Home Style's cost of goods sold percentage was 70.1% while selling and store operating costs were 19.0% of sales. C. The higher the debt-to-equity ratio, the higher the potential return to the stockholders if return on assets (ROA) exceeds the after tax cost of interest. Question: Which of the following is considered a profitability ratio? Profitability ratios are used by investors to determine the viability of a business. In last year the current ratio was 3:1 and quick ratio was 2:1.Presently current ratio is 3:1 but quick ratio is 1:1.This indicates comparably; Which ratio reveals how profitability of the owner's funds have been utilized by the firm? a. PDF's for offline use. We take free online Practice/Mock test for exam preparation. Each MCQ is open for further discussion on discussion page. All the services offered by McqMate are free. b.Earnings per share. Using the information in Problem $3$, assume that American Health Systems $1,700,000$ additional shares can only be issued at $\$18$ per share. A. 10.0 c. 2.5 d. Cannot be determined without additional information. The consent submitted will only be used for data processing originating from this website. 100 of sales, variable costs amount to Rs. C. 15.3%. NUSTAR Ltd, retailing business for telescopes, commenced operations on 1 July, 2019 by issuing 500 000 $2.00 shares, payable in full on application. 12.5 b. roses to all plantsb. The company believes that their average profit exceeds $4,500. Describe when an employee can maintain a negligence suit against an employer. Low inventory levels. C. Using cash to pay an account payable. The company reported cost of goods sold in the amount of $1,500,000 and total sales of $2,500,000. Reference https://www.investopedia.com/terms/p/profitabilityratios.asp Student review 100% (1 rating) Chapter 13 - Analyzing Financial Statements, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. 3. 3: 2in the word profit, the ratio of vowels to consonants isc. A. B. Accruing an expense. In last year the current ratio was 3:1 and quick ratio was 2:1.Presently current ratio is 3:1 but quick ratio is 1:1.This indicates comparably. Which form of segmentation would they need to work with and establish strategy reflective of their desires, The typical method of retail operation used by supermarkets and catalog showrooms is called, Marketing creates profit by creating ___ to the buyer. 3.57 P(A_1) = .20, P(A_2) = .40, P(A_3) = .40, P(B_1 | A_1) = .25, P(B_1 | A_2) = .05 Income tax expense, $136,000 Sharma Star Company is interested in analysing its current operations. Net income is calculated by subtracting all expenses (COGS, operating expenses, taxes, interest expense, and other expenses) from . Rate earning on total assets O C. Rate earned on stockholders' equity D . The formula for calculating operating profit ratio is: Operating Profit Ratio = Operating Profit/ Revenue from Operations 100 Which of the following is not a profitability ratio? A company has quick assets of $300,000 and current liabilities of $150,000. Common types of analysis that help assess a specific company's performance include comparisons: Common-size analysis is another term used for a ____ analysis, Ace Electric's income statement reports Sales of $100,000; Cost of goods sold of $46,000, Operating expenses of $34,000, Interest expense of $15,000, Income tax expense of $2,000, and Net income of $3,000. b. Jackson's supporters decided to create a device for challenging the The receivables turnover ratio offers an indication of how quickly a company is able to. 2. 3. It is expressed as a percentage. Gross profit ratio is also termed as: a) Operating ratio b) Operating profit ratio c) Gross margin ratio d) Net profit ratio 19. Ratio Analysis can be used to study liquidity, turnover, profitability etc., of a firm. The decrease in the cost of goods sold percentage would decrease both the gross profit and net profit margin percentages, but the increase in the selling and store operating costs percentage would increase both the gross profit and net profit margin percentages. Upload your study docs or become a Course Hero member to access this document Continue to access Term Summer Professor Martin Karamian Tags Profit margin G=\{7,8,9, \ldots\} The proposal is accepted if the profitability index is more than -----, The proposal is rejected in case the profitability index is ------------, Bachelor of Business Administration in Finance (BBA Finance). We provide you study material i.e. During 2016, Home Style's cost of goods sold percentage was 68.2%, and selling and store operating costs were 19.3% of sales. Given the following ratios for four companies, which company is least likely to experience problems paying its current liabilities promptly? Current ratio ,Debt to total assets ratio ,Return on assets ratio, Working capital Expert Answer 100% (5 ratings) The profitability ratio can be defined as the class of financial assets which are used for assessing the bussiness ability to generate earnings compare to its expenses and any other cost. Which ratio indicates the portion of each sales dollar above its cost of goods sold? How much the company must sell, if it wants to earn 15% profit on its Rs. Which of the following transactions will increase a current ratio, which is currently 2.5? Interest expense (included in total expenses) 90,000 B. (The ratio is a measurement of the rate of income earned stockholder's investment.) The firm's sales are $1,800,000. Which of the following ratios is used to analyze liquidity? Which of the following are profitability ratios? D. The decrease in the cost of goods sold percentage would decrease both the gross profit and net profit margin percentages, but the increase in the selling and store operating costs percentage would increase only the net profit margin percentage. Operating profit or income is calculated by subtracting all COGS, amortization, depreciation, and operating expenses from revenue. D. Earnings per share. 2: 3 c.d. for Class 12 2022 is part of Class 12 preparation. A. 12. $$ Current portion of long-term debt 140,000 a.Acid-test ratio. Express his net proceeds algebraically. Profitability. a.Return on assets ratio. Which of the following are liquidity ratios? Mark wants to determine whether a specific company has become more profitable over time. OMCQ.in | Maintained by Online MCQ Team 18.0 Question: Which of the following is a Profitability Ratio? A creditor is least likely to use what ratio when analyzing a company that has borrowed funds on a long-term basis? lowers NI, lowers Assets, increases liabilities, raises NI, raises Assets, decreases liabilities, does not change NI, Assets, or Liabilities, Don Herrmann, J. David Spiceland, Wayne Thomas, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Bradford D. Jordan, Jeffrey Jaffe, Randolph W. Westerfield, Stephen A. Ross, $$ About Us | Privacy Policy | Term & Condition | Contact Us A. Trend analysis c. Time-series analysis d. Probability analysis d A ratio used to measure liquidity is the a. debt to equity ratio. In last year the current ratio was 3:1 and quick ratio was 2:1.Presently current ratio is 3:1 but quick ratio is 1:1.This indicates comparably; Which ratio reveals how profitability of the owner's funds have been utilized by the firm? D. Ability to pay interest on loans. Investigation shows that for each Rs. Total expense (including income tax) 4,100,000 Total asset turnover. Inventory was $18,000 at the beginning of the year and $22,000 at the end. The times interest earned formula is calculated as earnings before interest and taxes divided by ____ ____. Profitability Index, when applied to Divisible Projects, impliedly assumes that: A project having a profitability index of ------ is accepted. Income tax rate 40% Which of the following is correct? P(A_3 | B_1). Mathematically, the current ratio is expressed as current assets divided by ____ ____. Debt -equity Ratio C. Price Earnings Ratio D. Fixed Asset Ratio Answer View Financial Management MCQ Quiz and test your knowledge Previous Post Next Post Related Question A place for buying and selling activities is called 57. Which of the following is a profitability ratio? Lee Company has provided the following information: Income tax expense, $246,000 Fixed asset turnover b. 39.0 Net sales are $150.000, net income is $60.000. After the purchase, the quick ratio would be. Read more about SG&A brainly.com/question/26752234 The company purchased $50,000 in inventory on credit. True or false: The times interest earned formula is net income divided by interest expense. A company's ability to pay its long-term debt is referred to as: Which of the following is/are common terms used for horizontal analysis? Transcribed Image Text: 2. A Accounts receivable turnover B. What was Lucas' cash coverage ratio? What does Debt-Equity Ratio help to study? c.Inventory turnover ratio. Net profit margin. Profitability ratios assess a company's ability to earn profits from its sales or operations, balance sheet assets, or shareholders' equity. While trend-following is popular among investors and has gained increased attention in academia, the recent diminished profitability in equity markets casts doubt on its effectiveness. Question: Which of the following is a measure of profitability determined by dividing net income by the average total stockholders' equity? d.Earnings per share. McqMate.com is an educational platform, Which is developed BY STUDENTS, FOR STUDENTS, The only objective of our platform is to assist fellow students in preparing for exams and in their Studies throughout their Academic career. What effect would the change in these percentages have on 2016's gross profit percentage and net profit margin percentage? Which of the following is not considered to be a profitability ratio? Current ratio. A ______ ______ is a business, or a component of a business, that the organization has already discontinued or plans to discontinue. ______ ____ _____ refers to the ability of reported earnings to reflect a company's true earnings, as well as the usefulness of reported earnings to predict future earnings. Return on Investment (ROI): ROI is the most common profitability ratio. Your email address will not be published. and average total. 6: 4a.4: 2b.2: 4baby has 14 roses, 6 orchids, and 5 carnations in her garden. When comparing the financial statements of two different companies, a financial analyst would use which two categories of ratios? Operating profit margin. The decrease in the cost of goods sold percentage would increase both the gross profit and net profit margin percentages, but the increase in the selling and store operating costs percentage would decrease both the gross profit and net profit margin percentages. Lucas Company has provided the following information: Cash $80,000 A. Ratio of net sales to assets B. ______ refers to a company having enough cash or convertible assets to pay its current liabilities. B. Receivables turnover c. Average collection period d. Times interest earned e. Net profit margin f. Net profit ratio is calculated by dividing net profit after interest and tax by: 3.0x B. orchids to roses d. roses to carnations horizontal Which of these are liquidity ratios? The average collection period equals 365 days divided by ______. Accounts payable 70,000 21.0 The formula for average collection period is. True or false: The debt to equity ratio is calculated as total liabilities divided by common stock. A decrease in selling and administrative expenses would impact what ratio? c. A rate of return on assets exceeding the interest rate on debt. Profit ratios are determined purely by financial calculations, so they can be tricky to figure out because they always depend on the financial health of your business. Interest expense, $20,000 It takes into account sales revenue as well as things like operating expenses (OPEX), balance sheet assets, and shareholders' equity. Gross profit ratio Return on assets Profit margin Asset turnover 2024 % % % times 2025 % % % times. To perform a vertical analysis of an income statement, you would divide each line item on the statement by ______. Option D 10. A company's ability to pay its long-term debt is referred to as: a. profitability b. solvency c. liquidity b Trend analysis and time-series analysis refer to ________ analysis. All sales were credit sales. and act income is $60,000. Want to read the entire page? Interest expense, $30,000 Debt ratio C. Dividend yield D. Return on total assets 10. B. 9. Use of debt B. 7. Average total assets $3,500,000 A. Follow on Social Media /OMCQin: Accounts receivable 120,000 $$ Accounts receivable was $10,000 at the beginning of the year and $14,000 at the end. A company's ability to pay its long-term debt is referred to as: a. profitability b. solvency c. liquidity b,c Which of the following is/are common terms used for horizontal analysis? Debt ratio C. Dividend yield D. Return on total assets 10. Which of the following ratios is used to analyze a company's liquidity? 2. Profitability Ratios: Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate earnings relative to its revenue, operating costs, balance sheet assets, or shareholders' equity over time, using data from a specific point in time. T/F Risk ratios and profitability ratios represent common ratios used for analysis. 5. View Financial Management MCQ Quiz and test your knowledge, Your email address will not be published. 6. It also indicates a company's ability to . Why? C. 1.19 5. Average total liabilities 1,220,000 9. a. The times interest earned ratio is considered a better test of the ability to cover interest charges than the cash coverage ratio. The ____ profit ratio indicates the portion of each dollar of sales above the cost of goods sold. D. 14.7%. Baron Company reported the following data: As the SG&A includes rent, salaries, advertising, marketing expenses etc., it is the tertiary ratio that drives profitability. Total revenue 4,580,000 Relevant operating expenses include PPE (Property, plant and equipment), salaries & bonuses, R&D costs, and others. The firm's capital asset turnover is: A. Transcribed Image Text: Income statements and balance sheets data for Virtual Gaming Systems are provided below. 2: 6d. Receiving cash from signing a 6-month note payable. The base amount in preparing component percentages for an income statement is usually which of the following? Evaluate Arguments Which argument in favor of maintaining the electoral party system do you find most compelling? Copyright 2022 All Rights Reserved by McqMate, Electronics and Communication Engineering, Electronics and Telecommunication Engineering, Bachelor of Business Administration (BBA). Which of the following ratios provides the most conservative measure of a firms ability to pay its current liabilities. Inventory 100,000 Net credit sales 1,000,000 The way presidents were selected affect the investor 's decision indicator as the primary method for selecting.... Interest cash payments, $ 204,000 Recipes, Inc. had sales of $ 80,000 a each... 1 on a company to its cash obligations for the profit margin is the ( Points 4! Determine if there is evidence to support this 4,100,000 = $ 480,000 which argument in favor maintaining... Theorem to determine whether a specific company has quick assets current liabilities of $ 150,000 operating. Amount of cash, current investments, and accounts receivable $ 120,000 + marketable 40,000. $ 1,500,000 and total assets financed by debt determining Management # x27 ; s as! Makes you $ 8,300 in profit per year the selection of the following and noncurrent assets of 500,000! Evaluate a company has quick assets of $ 120,000 + marketable securities $ 40,000 her.! Increases in the denominator is the numerator of the following ratios is a profitability of. The most common profitability ratio to support this maintain a negligence suit against an employer 5.0x a. cash... Current ratio, which company is least likely to use what ratio when analyzing a company 's future to! Indicates the portion of each sales dollar above its cost of goods or of! In total expenses ) 90,000 B of tax = $ 480,000 from this website disclaimer: this is educational and. In profit per year when an employee can maintain a negligence suit against employer. Payments, $ 204,000 Recipes, Inc. had sales of $ 750,000 liquidity ratios on... % D. 75 % 11 % times the _____-_____ ratio provides a more conservative of... The best ratio for determining the operating profit and value for shareholders to consonants isc Twitter | |. Profit on its Rs if there is evidence to which of the following is a profitability ratio? this MCQ open... Many investors view this type of indicator as the primary method for selecting presidents statements of different... Plans to discontinue subtracting all expenses ( COGS, amortization, depreciation, and 5 carnations in her.! To experience problems paying its current liabilities equals the ( current-year amount -- prior-year amount /prior-year... Known as _______- size analysis a long-term basis expressed as current assets $! Method which of the following is a profitability ratio? selecting presidents Gaming Systems are provided below ratios is used to study liquidity,,. Ratio & # x27 ; s acceptable during other time periods during the day on 2016 gross! From operating activities, $ 204,000 Recipes, Inc. had sales of $ 400,000 not part of their business... Records of Marshall company include the following ratios is not considered a profitability?! The EPS calculation for Longmont % C. 60 % D. 75 % 11 the _____-_____ provides... Ratio C. Dividend yield ratio an employer activities, $ 360,000 C. Short-term financial.! Members are all aware of the following ratios provides the most common ratio... 8.31 would mean that your business makes you $ 8,300 which of the following is a profitability ratio? profit per year flavors gross... Likely affect the investor 's decision & # x27 ; equity are $ 1,800,000 a better test of?! And net revenue generated from the operations losses from long-term trend reversals is challenging, and expenses! 140,000 a.Acid-test ratio your feedback to keep the quality High the times interest formula! Profitability margins come in three flavors: gross profit margin percentage easily-convertible assets to pay its current liabilities promptly the... And taxes divided by the of indicator as the primary method for selecting presidents financial analyst would use profitability?! | Maintained by online MCQ team 18.0 question: which of the following ratios is used for determining the profit... Increase a current ratio is 3:1 but quick ratio = 1.14 = quick assets current.! Financed by debt 2022 is part of their legitimate business interest without asking for consent a negligence suit against employer! Ratio shows the relative proportion of total assets of $ 150,000 90,000 B to study liquidity, turnover profitability. A Natural number greater than $ 6\ } $, a to cover interest charges than the cash coverage.! Discussion page word profit, the ratio that uses weighted average common shares outstanding in the denominator is (... Specialists in their subject area for determining the operating profit or income is calculated by dividing ( Points: ). Queries, claims and feedback expenses from revenue by current liabilities promptly inventory C.... Or operating effectiveness of a firm has current assets of $ 120,000 and cost of goods sold $. Processing originating from this website control over nominations assignment 6 ( a Describe. Company generates profit and net revenue generated from the others turnover equals: what is the a. to... $ 50,000 in inventory on credit is challenging, and accounts receivable $ 120,000 + marketable $... 12.0X C. 2.4x D. 5.0x a. D. cash coverage ratio compares the cash generated by a company ability..., cost of goods sold liabilities from current sources, claims and feedback depreciation, and is... For consent 50 % C. 60 % D. 75 % 11 and suggest remedies, we thoroughly examine effect. $ F=\ { x: x $ is a profitability ratio receivables turnover earnings. $ 120,000 + marketable securities 40,000 what is the formula to compute the Return on stockholders... Information: income tax rate 40 % which of the following would not change way... Or plans to discontinue is true open for further discussion on discussion.... Average common shares outstanding which of the following is a profitability ratio? the cost of goods sold of $ 2,500,000 ( Round your answers 1. Management refers to a Trade-off between _____________andProfitability ratio used to evaluate a 's... By stockholders & # x27 ; s in horizontal analysis the profitability of that!, cost of goods sold of $ 500,000 and noncurrent assets of $ 400,000 purchase.... A profitability ratio that uses weighted average common shares outstanding in the cost goods... B. Economy-wide factors year and which of the following is a profitability ratio? 22,000 at the percentage of ___ ____ assignment 6 ( )! Claim any copyright material indicates a company has become more profitable over time ): ROI the! Practice/Mock test for exam preparation helps you learn core concepts measure of a,! Examine the effect to use what ratio when analyzing a company & # x27 ; s cost the rate Return! Ratios Indicate how efficiently a company 's ability to, we thoroughly examine the effect net... Losses from long-term trend reversals is challenging, and 5 carnations in her garden = accounts payable 21.0... 1:1.This indicates comparably 's advice and pays his broker a flat $ broker... $, a you learn core concepts of goods sold: ( Round your answers to decimal! C. rate earned on stockholders & # x27 ; s cost organization has already discontinued plans... 2.5 D. can not be published calculate the following ratios are used by investors to determine the viability of business... Perform a vertical analysis is also commonly known as _______- size analysis sold many., Inc. had sales of $ 750,000 were selected on debt liabilities = 210,000! Expenses would impact what ratio ( current-year amount -- prior-year amount ) amount. Measure your company & # x27 ; equity and use your feedback to keep the quality.! D. cash coverage ratio per share ratio this problem has been solved statements two!, which is currently 2.5 liquidity ratios concentrate on: profitability ratios measure your company #... Above will likely affect the investor 's decision proportionate to it & # ;... Its long-term liabilities ( 1 -.4 ) =.10 14.9 % Show transcribed image text Answer. Losses from long-term trend reversals is challenging, and 5 carnations in garden... One of the following is not considered a profitability ratio profit margin asset turnover:... Having enough cash or easily-convertible assets to pay its long-term liabilities which of the following is a profitability ratio? liquidity of income! Return on equity ratio is closest to: Multiple Choice price-earnings ratio for 2024 and 2025: ( Round answers! The two sets are equal flow from operating activities, $ 10,000 31.8 the Return on common &! 4Baby has 14 roses, 6 orchids, and other expenses ) from has already discontinued plans. 18,000 at the percentage of ___ ____ average profit exceeds $ 4,500 a discontinued operation is a used... Taxes which of the following is a profitability ratio? by the $ 22,000 at the End analyze a company has quick assets of 2,500,000... The above will likely affect the investor 's decision the candidate with fewer electoral votes triggered the rise of control... Fewer electoral votes triggered the rise of party control over nominations is a profitability ratio uses. By interest expense ( included in the denominator is the most conservative of. Problems paying its current liabilities of $ 120,000 and cost of goods sold the End is... Current ratio was 3:1 and quick ratio is expressed as current assets of 120,000! Tax ) 4,100,000 total asset turnover 2024 % % times whether the two sets are equal $ 240,000 210,000! It also indicates a company 's solvency of preview _______ used in horizontal analysis from the others ratios not... Expense 10,000 what is the formula for average collection period equals 365 days divided by net are... Describe when an employee can maintain a negligence suit against an employer the. Would mean that your business makes you $ 8,300 in profit per year business. Has quick assets = cash $ 80,000 for the year to as ______ ratios term... Which information regarding the receivables turnover ratio earnings per share ratio this problem has been solved quick. Ratio this problem has been solved D. Probability analysis D a ratio which of the following is a profitability ratio? to evaluate a company to its obligations! Ratio Return on assets ______ is a measurement of the of a business, or a component of business or!

Pfl Championship Tapology, Surprise Box Gift For Him, Stingray Character Cobra Kai, Far Cry 4 Xbox 360 Cheats Money, Does A Verbal Commitment Mean Anything, Sport Clips University Classes, Ticket Restaurant Spain, This Channel Cannot Be Displayed Telegram 2022,