Increase in net profit ratio means increase in sales
Interest coverage ratio depends upon tax rate
Lower Debt-Equity ratio means lower financial risk
A
Increase in net profit ratio means increase in sales
B
Interest coverage ratio depends upon tax rate
C
A higher receivable turnover is not desirable
D
Lower Debt-Equity ratio means lower financial risk
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Solution
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Debt Equity ratio is calculated by dividing company's total liabilities by its stockholder's equity, is a debt ratio used to measure a company's financial leverage.
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Similar Questions
Q1
Higher debt-equity ratio results in:
(a) Lower financial risk
(b) Higher degree of operating risk
(c) Higher degree of financial risk
(d) Higher EPS
View Solution
Q2
Higher working capital usually results in
(a) higher current ratio, higher risk and higher profits
(b) lower current ratio, higher risk and profits
(c) higher equity, lower risk and lower profits
(d) lower equity, lower risk and higher profits
View Solution
Q3
Higher working capital usually results in:
(a) Higher current ratio, higher risk and higher profits
(b) Lower current ratio, higher risk and profits
(c) Higher equity, lower risk and lower profits
(d) Lower equity, lower risk and higher profits
View Solution
Q4
The following Balance Sheet and other information, calculate following ratios:
(i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio
Balance Sheet as at March 31, 2017
Particulars
Note No.
Rs.
I. Equity and Liabilities:
1. Shareholders’ funds
a) Share capital
10,00,000
b) Reserves and surplus
9,00,000
2. Non-current Liabilities
a) Long-term borrowings
12,00,000
3. Current Liabilities
a) Trade payables
5,00,000
Total
36,00,000
II. Assets
1. Non-current Assets
a) Fixed assets
Tangible assets
18,00,000
2. Current Assets
a) Inventories
4,00,000
b) Trade Receivables
9,00,000
c) Cash and cash equivalents
5,00,000
Total
36,00,000
Additional Information: Revenue from Operations Rs. 18,00,000 Calculate:
i) Debt-Equity Ratio
ii) Working Capital Turnover Ratio
iii) Trade Receivables Turnover Ratio
(Debt-Equity Ratio 0.63:1; Working Capital Turnover Ratio 1.39 times; Trade Receivables Turnover Ratio 2 times)