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Question :
81. Return equity computations used in evaluating: A. Liquidity.B. Profitability.C. Gross profit.D. Whether a ratio improving : 1267473

81. Return on equity computations are used in evaluating:

A. Liquidity.

B. Profitability.

C. Gross profit.

D. Whether a ratio is improving or deteriorating over time.

82. The financial ratio intended to measure the effectiveness with which management has utilized the resources of the business, regardless of how these resources are financed, is:

A. Gross profit rate.

B. Current ratio.

C. Return on assets.

D. Return on equity.

83. The return on assets ratio usually is computed as:

A. Net sales divided by average total assets.

B. Gross profit divided by average total assets.

C. Operating income divided by average total assets.

D. Net income divided by average total assets.

84. If a company has a current ratio of 2 to 1, and purchases inventory on credit, what will this do to its current ratio?

A. Increase the current ratio.

B. Decrease the current ratio.

C. Does not change the current ratio.

D. Cannot be determined.

85. The return on equity ratio usually is computed as:

A. Net income divided by average total assets.

B. Operating income divided by average total stockholders' equity.

C. Gross profit divided by average total stockholders' equity.

D. None of the above answers is correct.

86. The measurement that best reflects investors' expectations about future earnings is:

A. Earnings per share.

B. Return on assets.

C. The price/earnings ratio.

D. Return on equity.

87. The interest coverage ratio is computed by dividing:

A. Operating income by annual interest expense.

B. Net income by annual interest expense.

C. Carrying value of bonds by cash interest payments.

D. Earnings per share by the prime interest rate.

88. Amalgamated Corporation's net income was $2,400,000 in 2009 and $800,000 in 2010. What percentage increase in net income must Amalgamated achieve in 2011 to offset the decline in profits in 2010?

A. 75%.

B. 300%.

C. 33.33%.

D. 800%.

89. If a retail store has a current ratio of 2.5 and current assets of $195,000, the amount of working capital is:

A. $78,000.

B. $380,000.

C. $330,000.

D. $117,000.

90. The Plaza Company has working capital of $540,000 and a current ratio of 3 to 1. The amount of current assets is:

A. $405,000.

B. $540,000.

C. $810,000.

D. $270,000.