62.BubblesSoapCorporationhasa quickratioof1.0 anda currentratioof2.0 implyingthat a.thevalueofcurrentassetsis equalto thevalueofinventory. b.thevalueofcurrentassetsis equalto thevalueofcurrentliabilities. c.thevalueofcurrentliabilitiesis equalto thevalueofinventory. d.Allof theabove. e.Noneoftheabove. c ANSWER: Medium DIFFICULTY: Currentratioandquickratio TOPICS: 63.Whichof thefollowingstatementsismostcorrect? a.firmswithrelativelylowdebtratioshavehigherexpectedreturnswhenthebusinessisgood. b.firmswithrelativelylowdebtratiosareexposedtoriskof losswhenthebusinessispoor. c.firmswithrelativelyhighdebtratioshavehigherexpectedreturnswhenthebusinessisbad. d.firmswithrelativelyhighdebtratioshavehigherexpectedreturnswhenthebusinessisgood. e.noneoftheabove. d ANSWER: Medium DIFFICULTY: Debtmanagementratios TOPICS: 64.Allotherthingsconstant,anincreaseina firm'sprofitmarginwould a.increasetheadditionalfundsneededforfinancingagrowthinoperations. b.decreasetheadditionalfundsneededforfinancingagrowthinoperations. c.haveno effecton theadditionalfundsneededforfinancingagrowthinoperations. d.decreaseitstaxes. e.noneoftheabove. b ANSWER: Medium DIFFICULTY: Profitmargin TOPICS:
62.BubblesSoapCorporationhasa quickratioof1.0 anda currentratioof2.0 implyingthat a.thevalueofcurrentassetsis equalto thevalueofinventory. b.thevalueofcurrentassetsis equalto thevalueofcurrentliabilities. c.thevalueofcurrentliabilitiesis equalto thevalueofinventory. d.Allof theabove. e.Noneoftheabove. ANSWER: c DIFFICULTY: Medium TOPICS: Currentratioandquickratio 63.Whichof thefollowingstatementsismostcorrect? a.firmswithrelativelylowdebtratioshavehigherexpectedreturnswhenthebusinessisgood. b.firmswithrelativelylowdebtratiosareexposedtoriskof losswhenthebusinessispoor. c.firmswithrelativelyhighdebtratioshavehigherexpectedreturnswhenthebusinessisbad. d.firmswithrelativelyhighdebtratioshavehigherexpectedreturnswhenthebusinessisgood. e.noneoftheabove. ANSWER: d DIFFICULTY: Medium TOPICS: Debtmanagementratios 64.Allotherthingsconstant,anincreaseina firm'sprofitmarginwould a.increasetheadditionalfundsneededforfinancingagrowthinoperations. b.decreasetheadditionalfundsneededforfinancingagrowthinoperations. c.haveno effecton theadditionalfundsneededforfinancingagrowthinoperations. d.decreaseitstaxes. e.noneoftheabove. ANSWER: b DIFFICULTY: Medium TOPICS: Profitmargin
Test-Bank-CFIN-4-4th-Edition-Besley.docx