Reference no: EM131310865
1. A firm's profit margin is less than its peer group's. Which of the following statements draws an INCORRECT implication from this comparison between asset utilization ratios?
The firm may not be managing its cost of goods and operating expenses as well as its peers.
The firm's return is less than the peer group's; the firm appears to be managing its income statement poorly in comparison with its peers.
The firm has fewer problems generating revenues and controlling costs than their peers.
The firm has a higher cost per dollar of revenue than its peers.
2. By comparing a firm's liquidity ratios to a peer group's, managers can NOT gauge ________.
whether—in comparison to its competitors—the firm has more money in current assets for every dollar of short-term debt
whether —in comparison to its competitors—the firm has more cash and accounts receivable for every dollar of short-term debt
whether —in comparison to its competitors—the firm has more money in inventory than its competitors
whether—in comparison to its competitors—the firm needs more vacation time
3. Liquidity ratios indicate the degree to which a firm can ________.
satisfy its creditors in a timely fashion
generate sufficient profit from its assets
finance its assets
produce adequate dividends
4. The difference between the historic price a firm paid and its going price among current buyers and sellers is the difference between its _______.
book value and depreciation
market value and depreciation
market value and intrinsic value
book value and market value
5. A depreciable asset that is sold will likely NOT recoup its ________.
initial book value
market value
markup
losses
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