1. An analysis of a firm's financial ratios over time that is used to determine the improvement or deterioration in its financial situation is called (Points : 5)
5. Which of the following statements is most correct? (Points : 5)
An increase in a firm's debt ratio, with no changes in its sales and operating costs, could be expected to lower its profit margin on sales.
An increase in DSO, other things held constant, would generally lead to an increase in the total asset turnover ratio.
An increase on the DSO, other things held constant, would generally lead to an increase in the ROE.
In a competitive economy, where all firms earn similar returns on equity, one would expect to find lower profit margins for airlines, which require a lot of fixed assets relative to sales, than for fresh fish markets.
It is more important to adjust the Debt/Asset ratio than the inventory turnover ratio to account for seasonal fluctuations
9. What is the term used to describe an annuity with an infinite life? (Points : 5)
There is no special term for an infinite annuity
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