Which changes would not cause the operating profit ratio

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Reference no: EM132921016

Problem 1: Calculate the quick ratio or acid test ratio based on the information below:

Total current assets 120

Total current liabilities 80

Inventory 55

Accounts receivable 35

Cash 30

Long-term debt 100

(a) 0.81

(b) 1.36

(c) 1.71

(d) 0.71

Problem 2: Which of the following ratio by itself indicates that the company has very little debt and may be under-leveraged?

(a) Low debt to EBITDA ratio

(b) High debt to EBITDA ratio

(c) Low debt to equity ratio

(d) High debt to equity ratio

Problem 3: Which of the following changes would NOT cause the operating profit ratio to decline?

(a) Decrease in selling price

(b) Increase in interest rate

(c) Increase in material cost

(d) Increase in research and development expenses

Reference no: EM132921016

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