Financial ratios are used to:

weigh and evaluate the operating performance of the firm

provide an absolute benchmark of industry performance

determine which firm will provide the highest return to investors

None of the above are correct

weigh and evaluate the operating performance of the firm

Financial Management Author: rikazzz

A. the prior year’s income statement

B. sales projections and the production plan

C. the cash budget

D. the cash budget and prior year’s income statement

A. to break the income statement down into monthly periods

B. to determine monthly cash receipts

C. to determine the collection pattern

D. to allow the firm to anticipate the need for outside funding

A. the degree to which debt is used in financing the firm

B. the difference between price and variable costs

C. the extent to which capital assets and fixed costs are utilized

D. the difference between fixed costs and the contribution margin

A. reflects the firm’s commitment to fixed, financial assets

B. has no impact on the earning of the firm

C. reflects the amount of debt used in the capital structure of the firm

D. primarily affects the left side of the balance sheet

A. their buyers’ forecasts for the coming season

B. matching sales and inventory levels

C. decreasing inventory turnover

D. their investment in capital assets

A. investors generally prefer to invest short periods of time

B. government policy maintains this relationship

C. there is greater risk in long-term bonds

D. exchange rate fluctuations establish this relationship

A. is more expensive than the use of collection centers

B. utilizes local banks to clear local payments made to the collection center

C. provides more float than collection centers

D. results in checks being forward to a P.O. box and clearing through local banks

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