Profitability ratios measure:

the speed at which the firm is turning over its assets

the ability of the firm to earn an adequate return on sales, total assets, and invested capital

the firm’s ability to pay off short term obligations as they are due

the debt position of the firm in light of its assets and earning power

the ability of the firm to earn an adequate return on sales, total assets, and invested capital

Financial Management Author: rikazzz

A. it is purely an accounting entry and doesn’t involve a direct disbursement of funds, freeing up these funds for other investments

B. it represents a reduction in asset holdings

C. it represents an increase in an asset account

D. amortization is not a source of funds

A. during the period

B. at the beginning of the period

C. at the end of the period

D. it doesn’t matter when they occur

A. a profitability ratio

B. a debt utilization ratio

C. an asset utilization ratio

D. a liquidity ratio

A. weigh and evaluate the operating performance of the firm

B. provide an absolute benchmark of industry performance

C. determine which firm will provide the highest return to investors

D. None of the above are correct

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

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