Wednesday, November 13, 2019

Which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales


Which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales? 
 
A. 
current ratio

B. 
equity multiplier

C. 
retention ratio

D. 
capital intensity ratio

E. 
payout ratio

 
7.
The internal growth rate of a firm is best described as the: 
 
A. 
minimum growth rate achievable assuming a 100 percent retention ratio.

B. 
minimum growth rate achievable if the firm maintains a constant equity multiplier.

C. 
maximum growth rate achievable excluding external financing of any kind.

D. 
maximum growth rate achievable excluding any external equity financing while maintaining a constant debt-equity ratio.

E. 
maximum growth rate achievable with unlimited debt financing.

 
8.
The sustainable growth rate of a firm is best described as the: 
 
A. 
minimum growth rate achievable assuming a 100 percent retention ratio.

B. 
minimum growth rate achievable if the firm maintains a constant equity multiplier.

C. 
maximum growth rate achievable excluding external financing of any kind.

D. 
maximum growth rate achievable excluding any external equity financing while maintaining a constant debt-equity ratio.

E. 
maximum growth rate achievable with unlimited debt financing.

 
9.
You are developing a financial plan for a corporation. Which of the following questions will be considered as you develop this plan?

I. How much net working capital will be needed?
II. Will additional fixed assets be required?
III. Will dividends be paid to shareholders?
IV. How much new debt must be obtained? 
 
A. 
I and IV only

B. 
II and III only

C. 
I, III, and IV only

D. 
II, III, and IV only

E. 
I, II, III, and IV

 
10.
Financial planning: 
 
A. 
focuses solely on the short-term outlook for a firm.

B. 
is a process that firms employ only when major changes to a firm's operations are anticipated.

C. 
is a process that firms undergo once every five years.

D. 
considers multiple options and scenarios for the next two to five years.

E. 
provides minimal benefits for firms that are highly responsive to economic changes.

 

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