Which of the following is true regarding the debt to equity ratio? a. The debt to equity ratio is a stringent measure of liquidity. b. The debt to equity ratio measures the productivity and desirability of the equity investment. c. The debt to equity ratio measures management’s ability to productively employ all its resources. d. The debt to equity ratio measures the capital structure of the entity. would D be the correct answer?

Which of the following is true regarding the debt to equity ratio? a. The debt to equity ratio is a stringent measure of liquidity. b. The debt to equity ratio measures the productivity and desirability of the equity investment. c. The debt to equity ratio measures management’s ability to productively employ all its resources. d. The debt to equity ratio measures the capital structure of the entity. would D be the correct answer?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

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Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 12MC: The cost of equity is _______. A. the interest associated with debt B. the rate of return required...

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The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
Working capital is an indication of the firms ________. A. asset utilization B. amount of noncurrent liabilities C. liquidity D. amount of noncurrent assets
Which one of these ratios measures the efficiency at which a firm employs its assets? a. Return on equity b. Equity multiplier O C. Total asset turnover O d. P/E ratio O e. Profit margin
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
Identify which ratio category is best described in each statement. • Ratios that help determine whether a company can access its cash and pay its short-term obligations are called • Ratios that help determine the efficiency with which a company manages its day-to-day tasks and assets are called asset management ratios. • Ratios that help assess a company's ability to service the interest and repayment obligations on its long-term debt and the degree to which it uses borrowed versus invested financial capital are called ratios. ratios help measure a company's ability to generate income and profits based on its invested capital. ratios examine the market value of a company's share price, its profits and cash dividends, and the book value of the firm's assets and relate them to other data items to determine how the firm is perceived in the stock market. liquidity ratios.
The cost of equity is ________. a.equal to the amount of asset turnover b.the interest associated with debt c.the weighted average cost of capital d.the rate of return required by investors to incentivize them to invest in a company
The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
A. Operating expenses are a function of: a. The cost of equity and the cost of debt b. The interest rates on debt and the amount of debt c. Design(s) of the value propositions, the skill level and processes for spending money to operate the company, and the loan term bond yield + the equity risk premium + risks specific to the company d. Design(s) of the value propositions, processes used to produce the value proposition(s), and the skill level and processes for spending money to operate the company B. Which of the following is most closely associated with margin as a %? a. Sales revenue b. The processes used to produce the company’s value proposition(s) c. The proportion of debt and equity in the company’s capital structure d. The average operating assets of the company C. Which of the following is most closely associated with asset utilization? a. The cost of equity b. Expenses c. Operating assets…
The ratio group most likely to be used to indicate a firm's ability to meet short-term financial obligations would be ____. a. activity ratios b. financial leverage ratios c. profitability ratios d. liquidity ratios
how value drivers (Return on Equity, Net Profit Margin, and Total Asset Turnover) are related to financial statement analysis?
If your goal is to determine how effective a firm in managing its assets, you would examine O Profit margin, Current ratio, Debt ratio O Price-earnings ratio, Times-interest-earned ratio, Operating Margin O Inventory turnover, Receivables turnover, Assets turnover O Quick ratio, Debt ratio, Times-interest-earned ratio
In the Du Pont method of analysis the two key drivers of return on equity are: a) Profit margin and return on assets b) Return on assets and the financing plan c) Profit margin and the financing plan In trying to measure a company's effectiveness in earning an adequate return on sales we would use which groups of ratios? a) Profitability ratios b) Asset utilization ratios c) Liquidity ratios

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a.	The debt to equity ratio is a stringent measure of liquidity.
b.	The debt to equity ratio measures the productivity and desirability of the equity investment.
c.	The debt to equity ratio measures management’s ability to productively employ all its resources.
d.	The debt to equity ratio measures the capital structure of the entity.