The Debt-equity ratio of a company is 1:2, state giving reasons which of thefollowing would improve, reduce or no change the ratio:-1) Debenture redeemed for cash2) Issue new equity shares3) Payment of Proposed dividends4) Goods Purchased on Credit5) Goods Purchased on Cash6) Redemption of Debentures against the Purchase of a Fixed Assets.

The Debt-equity ratio of a company is 1:2, state giving reasons which of thefollowing would improve, reduce or no change the ratio:-1) Debenture redeemed for cash2) Issue new equity shares3) Payment of Proposed dividends4) Goods Purchased on Credit5) Goods Purchased on Cash6) Redemption of Debentures against the Purchase of a Fixed Assets.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter5: Evaluating Operating And Financial Performance

Section: Chapter Questions

Problem 4EP

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The debt equity ratio of a company is 1:1 state giving reasons, which of the following would improve, reduce or not change the ratio (i)Purchase, of machinery for cash (ii)Purchase of goods on credit (iii) Sale of furniture at cost (iv)Sale of goods at a profit (v)Redemption of debentures at a premium
Which of the following ratios is(are) useful in assessing a company's ability to meet current maturing or short-term obligations? Acid-Test Ratio Debt to Total Assets Ratio a. Yes No b. Acid-Test Ratio Debt to Total Assets Ratio No No O c. Acid-Test Ratio Debt to Total Assets Ratio Y es No d. Acid-Test Ratio Debt to Total Assets Ratio Yes Yes
When is the return on assets equal to the return on equity? a. When the company issues equal amounts of long-term debt and common stock. b. When the company only issues equity to finance its borrowing. c. When the current ratio of the company equals 1. d. When the company issues no dividends for a given time period.
The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
6. What is the effect on the financial statement elements if an SME receives goods or services in an equity-settled share-based payment transaction? a. Increase in assets and increase in income b. Increase in assets and increase in liability c. Increase in assets and increase in equity d. No effect on any of the financial statement elements
Under IFRS regarding Financial Assets, which of the following is true? O If you hold debt until it matures and only to get cash flows from it, unrealized gains or losses are categorized as FVPL. You can decide if you want equity to be recorded as FVOCI or FVPL O You appy the business and cash flow tests for equity investments O Debt can be placed into an available for sale category
Owners equity represents which of the following? A. the amount of funding the company has from issuing bonds B. the sum of the retained earnings and accounts receivable account balances C. the total of retained earnings plus paid-in capital D. the business owners/owners share of the company, also known as net worth or net assets
When analyzing a companys debt to equity ratio, lithe ratio has a value that is greater than one, then the company has: a. equal amounts of debt and equity. c. less debt than equity. b. more debt than equity. d. none of these.
How is the short term debt repayment capacity of a company is assessed ? Choose the INCORRECT OPTIONa) Current Ratio is analyzedb) Liquidity Ratios and the Cashc) Quick Ratio is analyzedd) The statement of Cash Flows is analyzed
Which of the following statement is correct? Select one: O a. Return on assets is the ratio of net income after interest expense to total assets O b. All options are correct statement C. Average collection period is the average number of times it takes for the company's customers to pay their bills o d. Increase in the debt ratio indicate more reliance on debt as a source of financing
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The current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.