Agricultural policies questions.

Which of the following ratios includes a component that is not from the income statement

1. Return on sales
2. Times interest earned
3. Payout ratio
4. Gross profit ratio

If a firm has 13 inventory turnovers per year, approximate number of days` sales in its inventory is:

1. 13
2. 7
3. 28
4. 365

If a firm has a current ratio of 2.5 to 1 and just before the end of its fiscal year pays off a large short -term bank loan, its current ratio at the end of that year

1. Will fall below 2 to 1
2. Will be no different from what it woul have been had the loan been paid off just after the year`s end
3. Wil be higher that it would have been had the laon been paid off just after the year`s end
4. Will indicate that the firm has a liquidity problem.

The firm`s return on assets will be lower that its return on equity as long as the firm

1. Has any liability
2. Has any long term liability
3. Is successfully using leverage
4. Continue to pay dividends

Leverage:

1. Relates to the manner in which a firm finances its assets
2. Reduces the risks of investment in the common stock of the leveraged firm
3. Is particularly attractive for firms that operate in highly unstable industries
4. Is a financing strategy designed to increase the dividends to holders of preferred stock.

The amount of earnings per share

1. May have to be computed in two different ways if a firm has outstanding some securities or obligationsthat represent potential for dilution of the firm`s earnings
2. Is confidential information , release of which by a firm`s management would bring action by government regulatory agencies
3. Is likely to be very high for old established firms
4. Is likely to be high for firms that have high price-earning ratios.

If a company has a high payout ratio:

1. It may have had a particularly large drop in profit that year
2. It is probably a growth company
3. It is probably a high price-earning -ratio
4. It probably has few shares of stock outstanding.

Which of the following statements about solvency is true

1. A firm`s solvency is of special concern to its long-term creditors
2. A firm that is solvent would have no liquidity problems
3. A firm`s solvency relates to the firm`s debts and is little concerned to the firm`s stockholders
4. A firm`s solvency is unrelated to the extent of its financing leverage

Which of the following analytical ratios would not normally be classified as related to solvency?

1. Return on equity
2. Cash-flow to total debt
3. Times interest earned
4. Debt ratio

Which of the following is true

1. The current ratio of an electricity or water utility company would probably be lower than that of a tractor and power tiller manufacturer
2. Because it is desirable to be liquid, a firm should keep as much cash as possible
3. Because leverage is advantageous to the stockholders, a firm should try to attain a high debt ratio
4. Just prior to Christmas season, a department store would probably have higher than average current and quick assets ratios.