Which one of the following ratios would provide a

Which one of the following ratios would provide a best measure of liquidity?
A. Sales minus returns to total debt.
B. Total assets minus goodwill to total equity.
C. Current assets minus inventories to current liabilities.
D. Net profit minus dividends to interest expense.
Selected data from the year-end financial statements of World Cup Corp. are presented
below. The difference between average and ending inventories is immaterial.
Current ratio 2.0
Quick ratio 1.5
Current liabilities P600,000
Inventory turnover (based on cost of sales) 8 times
Gross profit margin 40%
World’s net sales for the year were
Roland & Company has a new management team that has developed an operating plan
to improve upon last year’s ROE. The new plan would place the debt ratio at 55
percent, which will result in interest charges of $7,000 per year. EBIT is projected to
be $25,000 on sales of $270,000, it expects to have a total assets turnover ratio of
3.0, and the average tax rate will be 40 percent. What does Roland & Company
expect its return on equity to be following the changes?
White Knight Enterprises is experiencing a growth rate of 9% with a return on assets of
12%. If the debt ratio is 36% and the market price of the stock is $38 per share, what
is the return on equity?
Manufacturer’s Inc. estimates that its interest charges for this year will be $700 and its
net income will be $3,000. Assuming its average tax rate is 30 percent, what is the
company’s estimated times interest earned ratio?
a. 2.40 b. 4.25 c. 5.33 d. 7.12

The condensed balance sheet as of December 31, 1982 of San Matias Company is
given below. Figures shown by a question mark (?) may be computed from the
additional information given:
ASSETS LIAB. & STOCKHOLDERS’ EQUITY
Cash P
60,000
Accounts payable P
?