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Questions and Answers
Which of the following ratios is used to evaluate a company's ability to pay its short-term debt obligations?
Which of the following ratios is used to evaluate a company's ability to pay its short-term debt obligations?
- Leverage ratio
- Profitability ratio
- Liquidity ratio (correct)
- Efficiency ratio
What does a low-debt service coverage ratio may indicate?
What does a low-debt service coverage ratio may indicate?
- Potential problems for a company in covering its interest and principal repayments (correct)
- A company's high liquidity
- A company's high profitability
- A company's ability to cover its interest and principal repayments
What does a high debt-to-equity ratio may indicate?
What does a high debt-to-equity ratio may indicate?
- Potential problems for a company trying to service and repay its debt (correct)
- A company's high liquidity
- A company's high efficiency
- A company's high profitability
What do profitability ratios measure and evaluate?
What do profitability ratios measure and evaluate?
What do efficiency ratios measure?
What do efficiency ratios measure?
What does a high current ratio usually indicate?
What does a high current ratio usually indicate?
What is the primary concern when evaluating a company's capacity to service and repay its debt?
What is the primary concern when evaluating a company's capacity to service and repay its debt?
What is the purpose of analyzing a company's cash flow statement?
What is the purpose of analyzing a company's cash flow statement?
What is a possible use of excess cash flows after investing activities are undertaken?
What is a possible use of excess cash flows after investing activities are undertaken?
What drives a company's cash flows?
What drives a company's cash flows?
What is an example of a cash flow trend that may indicate cash flow difficulties?
What is an example of a cash flow trend that may indicate cash flow difficulties?
What is a key aspect of evaluating a company's capacity?
What is a key aspect of evaluating a company's capacity?
What is the primary purpose of analyzing a company's leverage ratios?
What is the primary purpose of analyzing a company's leverage ratios?
What is the primary concern when evaluating a company's ability to access new equity?
What is the primary concern when evaluating a company's ability to access new equity?
What type of asset is considered redundant if it is not currently used in the business and could be sold to generate cash?
What type of asset is considered redundant if it is not currently used in the business and could be sold to generate cash?
What is the primary purpose of evaluating a company's working capital?
What is the primary purpose of evaluating a company's working capital?
What type of debt is considered high-quality if it has a low interest rate and a long repayment term?
What type of debt is considered high-quality if it has a low interest rate and a long repayment term?
What is the primary purpose of evaluating a company's debt service coverage ratio?
What is the primary purpose of evaluating a company's debt service coverage ratio?
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