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Unformatted text preview: d. Issue long-term debt and use the proceeds to purchase fixed assets e. Issue equity and use the proceeds to purchase inventory 4. Which of the following financial ratios is the best measure of the operating effectiveness of a firm’s management? a. current ratio b. net profit margin c. quick ratio d. return on investment 5. If a company’s average collection period is higher than the industry average, then the company may be? a. enforcing credit conditions upon its customers which are too stringent b. allowing its customers too much time to pay their bills c. too tough in collecting accounts d. a and c 6. Which of the following ratios would be the most useful to assess the risk associated with a firm being able to liquidate its short-term line of credit? a. Return on equity b. The acid test ratio c. The operating profit margin d. The fixed asset turnover The following questions are taken from the Fall 2001 midterm exam...
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This note was uploaded on 09/19/2009 for the course FIN FIN 221 taught by Professor Fin221 during the Fall '09 term at University of Illinois, Urbana Champaign.
- Fall '09