Question

How many of these ratios are used to evaluate long-term
financial stability?

- Debt ratio

- Equity ratio

- Capitalisation ratio

- Current ratio

- Acid test ratio

Select one:

a. 2

b. 3

c. 4

d. 5

Answer #1

**Answer : B)
3**

Three Raios From the above are Used to Evaluate the Long-Term Financial Stability. Those are

- Debt Ratio
- Equity Ratio
- Capitalization Ratio

Current Ratio and Acid Test Ratio Evaluate the Liquidity of the Firm in a short Run.

Long-Term Financial stability of the firm Depends on the Capital Structure composition of the firm. The Portion of the Debt and Equity in the total Captial measures the Lon-term Financial Stability and Solvency of the Firm

Debt Ratio = Total Liabilities / Total Assets

Equity Ratio = Equity Share Capital / Total Assets

Capitalization Ratio = Long term Debt / ( Long term Debt + Share holder's Equity)

The Smathers Company has a long-term debt ratio (i.e., the ratio
of long-term debt to long-term debt plus equity) of .55 and a
current ratio of 1.44. Current liabilities are $2,480, sales are
$10,720, profit margin is 12 percent, and ROE is 17 percent.
What is the amount of the firm’s net fixed assets? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)

The Smathers Company has a long-term debt ratio (i.e., the ratio
of long-term debt to long-term debt plus equity) of .53 and a
current ratio of 1.42. Current liabilities are $2,470, sales are
$10,690, profit margin is 10 percent, and ROE is 15 percent.
What is the amount of the firm’s net fixed assets?
(Do not round intermediate calculations
and round your answer to 2 decimal places, e.g.,
32.16.)
Net fixed assets
$

Computing Long-term Solvency Ratios TPITA Total Debt Ratio = (TA
-TE)/TA (5,606 - 2,768)/5,606 = 50.62% *Debt/Equity (D/E) =TD/ TE -
(5,606 - 2,768)/2,768 1.03 times Equity Multiplier (EM) = TA / TE =
1 + D/E !3! 1+ 1.03 = 2.03 * Long-term debt ratio = LTD / (LTD +
TE) - 843/ (843 + 2,768) = 23.35% Ex. If D/E-0.385, what is total
debt ratio? No teprodicon or diun thout consenit

Ratios and Fixed Assets [L{)2] The Maurer company has a
long-term debt ratio of .35 and a current ratio of 1.30. Current
liabilities are $955, sales 'are $7,210, profit margin is 8.3
percent, and RoE is 17.5 percent. what is the amount of the firm's
net fixed assets?

The Smathers Company has a long-term debt ratio (i.e., the ratio
of long-term debt to long-term debt plus equity) of .43 and a
current ratio of 1.27. Current liabilities are $2,395, sales are
$10,465, profit margin is 11 percent, and ROE is 16 percent.
What is the amount of the firm’s current assets? (Do not
round intermediate calculations and your answer to 2 decimal
places, e.g., 32.16.)
What is the amount of the firm’s net income? (Do not
round intermediate...

it's about long term debt paying ability ratios:
From these ratios ( Times interest earned ratio - Fixed charge
coverage ratio - debt raio) , which would you choose to use?
why?

All of the following are financial leverage ratios except
the
A. current ratio.
B. cash coverage ratio.
C. total debt ratio.
D. times interest earned ratio.
E. equity multiplier.

Class, here’s a great opportunity for a peer response. Take a
look at the ratios below. Select a category and examine how these
ratios might be useful to an external financial statement user:
Liquidity Ratios Working Capital = Current Assets – Current
Liabilities Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (Current Assets – Inventory) / Current Liabilities
Long-Term Solvency Ratios Debt to Assets Ratio = Total Liabilities
/ Total Assets Debt to Equity Ratio = Total...

One of the most widely used financial ratios is the current
ratio.
True
False

Financial ratio analysis is a tool that is often used to
evaluate the internal strengths and weaknesses of a company.
Potential investors and shareholders look closely at a firm's
financial ratios and compare it to industry averages. Use the
resources from Table 4-10 in your textbook, the video in the
module, and your Capstone Courier report to determine the financial
ratios (see Table 4-4 in your textbook) of your Capstone company.
Post your calculations to as many of the financial...

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