Question 34 of 50: Select the best answer for the question. 34. Which of the following would a lender most likely use to determine whether a firm could make its current loan payments? O A. Asset management ratios O B. Liquidity ratios OC. Profitability ratios OD. Market value ratios Mark for review (Will be highlighted on the review page)

Chapter 24 discusses various methods of analyzing financial statements in terms of calculating ratios. Specifically, Return on Assets (ROA) is a very simple calculation: ROA= Net Income/Average Total Assets.  Another method at arriving at this ratio is the DuPont Equation that was discussed in your textbook.  In looking at the DuPont Equation, what benefits are derived by using this method rather than the most typical method that I have described above?

A. Which of the following is most closely associated with the cost of using assets? a. Asset utilization b. Sales revenue c. Proportion of debt and equity d. Average price   B. Which of the following is most closely associated with the return on management’s use of assets? a. Cost of capital b. Mix of equity types c. Prime lending rate d. # of products sold

______ is the process of determining the price that market participants would likely pay for something.   a.) Analysis b.) Financing c.) Accounting d.) Valuation