Which of the following is an example of a leverage ratio? a. Payout ratio. b. Debt-equity ratio. c. Quick ratio. d. Return on equity. | Homework.Study.com (2024)

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• Which of the following ratios is not a debt management ratio? a. Times interest earned. b. Debt-to-equity ratio. c. Long-term debt-to-equity ratio. d. Return on equity ratio.
• What is the return on equity for a firm with a 15% return on assets, a 10% return on debt, and a 0.75 debt/equity ratio? a. 18.75% b. 20.00% c. 23.75% d. 26.25%
• Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage? A) debt-equity or equity multiplier ratio B) market-to-book ratio C) market debt-equity ratio D) current or quick ratio
• Which one of the following sets of ratios would generally be of the most interest to stockholders? (a) the quick ratio and times interest earned (b) cash coverage ratio and equity multiplier (c) re
• Which of the following is a measure of liquidity?a. Debt to equity ratio b. Profit margin c. Earnings per share d. Working capital
• A company has a leverage ratio of 2.5, due to having borrowed $1,000,000. What is its debt-to-equity ratio? A) 1 B) 1.5 C) 2.5 D) Not enough information to determine
• What ratio is used to measure a firm's liquidity? a. Debt ratio. b. Asset turnover. c. Current ratio. d. Return on equity.
• A) If a company has a debt ratio of 45%, what are its equity multiplier and its equity to assets ratio? B) If the Americell Corp. has a quick ratio of 1.4, a current ratio of 2.8, an inventory turnove
• A firm has a debt to equity ratio of 40%, debt of $250,000, and net income of $100,000. What is the return on equity?
• Firm A's debt-to-equity ratio is 1. What is its equity-to-assets ratio?
• Which one of the following statements is correct? A. If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0 B. Long-term creditors would prefer the time's
• Define each of the following financial leverage ratios: a. debt ratio; b. times-interest-earned (TIE) ratio; c. coverage ratio
• Leverage ratios measure a) the extent to which the firm uses debt financing. b) the speed with which the firm sells inventory. c) the sales relative to some base such as equity. d) the capacity of
• Which one of the following is a measure of long-term solvency? a. Price-earnings ratio b. Profit margin c. Equity multiplier d. Receivables turnover e. Quick ratio
• A firm has a debt-to-equity ratio of 0.5. What is its equity multiplier? a. 1 b. 2.5 c. 3 d. 1.5 e. 2
• A firm's growth rate is 8%, the ROA is 10%, the debt ratio is 20%. The stock is selling at $36. What is the return on equity?
• A firm has a debt-to-equity ratio of 0.70 and a market-to-book ratio of 2. What is the ratio of the book value of debt to the market value of equity?
• A firm has a debt-to-equity ratio of 0.80 and a market-to-book ratio of 2.14. What is the ratio of the book value of debt to the market value of equity?
• Calculate the return on equity using DuPont analysis if the firm has no debt, a quick ratio of 7.2, and a return on assets (investment) ratio is 7 percent. a. 7% b. 14.20% c. 14% d. 50.40%
• What is the return on equity for a firm with equal amounts of debt and equity financing, a 6% weighted average cost of capital, a 35% tax rate, and a 3% coupon rate on its debt that is selling at par value? a) 0.98%. b) 5.03%. c) 10.05%. d) 12.75%. e) Ca
• Calculate Debt Equity Ratio from the following: Rs Debentures 300,000 Loan from Banks 200,000 Equity Share Capital 175,000 Reserves and Surpluses 75,000
• Describe in laymen?s terms the concept of P/E ratio, quick ratio, current ration, debt/equity ratio, debt/assets ratio, price/book ratio, price/cash flow ratio and price/sales ratio.
• Locker Company has a debt-equity ratio of .65. Return on assets is 9.8 percent, and total equity is $850,000. What is the equity multiplier? Return on equity? Net income?
• A firm has a debt to equity ratio of 40%, debt of $250,000, and net income of $100,000. The return on equity is?
• A firm has a debt equity ratio of 50%, debt of $300,000, and net income of $90,000. The return on equity: A. 60% B. 15% C. 30% D. not enough information
• A firm has a debt to equity ratio of 50%, debt of $300,000, and net income of $90,000. The return on equity is: a. 60% b. 15% c. 30% d. Not enough information
• How do we use the debt to equity ratio to evaluate business performance?
• If the return on assets for a firm is 14.5% and the firm is financed with 50% debt and 50% equity, what is the return on equity?
• If you want to evaluate a company's liquidity and short-term debt paying ability, what ratio would you compute? What is the formula for that ratio? If the result of this ratio is 2, what does that tel
• Which of the following ratios is the most useful one in assessing a firm's ability to service debts? a. Fixed asset turnover. b. Times interest earned ratio. c. Gross profit margin. d. Return on equity.
• You must pay your firm's debts within 100 days. Which of the following ratios will show whether this can be done? A. current b. times interest earned c. quick ratio d. debt to equity e. asset turnover
• Consider a firm with a debt-equity ratio of 0.40. The required rate of return on this firm's unlevered equity is 18% and the pre-tax cost of debt is 8%. Sales, which totalled $34 million last year, ar
• A firm has a debt-to-equity ratio of 40%, a debt of $250,000, and a net income of $100,000. Calculate the return on equity.
• Primary Colors has a debt-equity ratio of .48, a return on assets of 13.6%, and a dividend payout ratio of 30%. What is the firm's rate of growth?
• ABC Company has net income of $90,182, return on assets of 9.4%, and debt-equity ratio of 0.53. What is the return on equity?
• A firm has a debt-equity ratio of 0.37. What is the total debt ratio? a. 0.41 b. 0.27 c. 0.59 d. 1.70 e. 1.37
• A firm has a debt-equity ratio of 0.65. What is the equity multiplier if total equity is $ 4,500? A. 1.45 B. 1.35 C. 1.55 D. 1.65
• What does the debt to equity ratio show, and how is it calculated?
• Is there an easily identifiable debt-equity ratio that will maximize the value of a firm? Why or why not? Support your answers with examples.
• Is there an easily identifiable debt-equity ratio that will maximize the value of the firm? Support answers with examples.
• A firm has a debt to equity ratio of 0.25. What is the firm's total debt ratio? (a) 0.33 (b) 1.50 (c) 0.50 (d) 2.00 (e) 5.00
• What do you call the ratios that help assess a company's ability to service the interest and repayment obligations on its long-term debt and the degree to which it uses borrowed versus invested financial capital?
• A firm has net income of $239,000, a return on assets of 7 percent, and a debt-equity ratio of .4. What is the return on equity?
• A firm has a debt-to-equity ratio of 0.45 and a market-to-book ratio of 2.5. What is the ratio of the book value of debt to the market value of equity?
• A firm has a return on equity of 16.2%. The debt-equity ratio is 44%, a capital intensity ratio of 1.08, a current assets of $138,000. What is the profit margin? A) 7.48% B) 15.19% C) 12.19% D) 13.69% E) 9.72%
• What are typical ratios used for relating total debt to a venture's assets and/or its equity?
• A firm has a debt-to-asset ratio of 75%, $255,000 in debt, and a net income of $51,000. Calculate return on equity. a. 80% b. 75% c. 76% d. 60%
• A firm has a debt to asset ratio of 75%, $240,000 in debt, and net income of $48,000. Calculate return on equity. a. 60% b. 20% c. 26% d. Not enough information
• A firm has a debt to asset ratio of 60%, $300,000 in debt, and net income of $50,000. Calculate return on equity. A. 60% B. 20% C. 25% D. not enough information
• A firm currently has a debt-equity ratio of 1/5. The debt, which is virtually riskless, pays an interest rate of 6.7%. The expected rate of return on the equity is 13%. What would happen to the expect
• A firm currently has a debt-equity ratio of 1/2. The debt, which is virtually riskless, pays an interest rate of 7.9%. The expected rate of return on the equity is 13%. What would happen to the expect
• Financial statement analysis. Suppose a firm's earnings growth rate is 5%, return on assets (ROA) is 22%, the debt ratio is 45% and the stock price is $50. Calculate equity multiplier. A) 1.45 B) 12
• Haugen Enterprises has an equity multiplier of 2.5. What is the firm's debt ratio?
• Ratio to assess the short-term debt paying capacity of a concern is: a. liquid ratio. b. debt equity ratio. c. creditors turnover ratio. d. None of the above.
• A firm's return on assets is 12% and the cost of the firm's debt is 7%. Given a 0.7 debt to equity ratio, what is the levered cost of equity? A. 7.0% B. 12.0% C. 13.6% D. 15.5%
• Draiman Company has a debt-equity ratio of 0.75. Return on assets is 10.4%, and total equity is $900,000. What is the equity multiplier? Return on equity? Net Income?
• Draiman Company has a debt-equity ratio of 0.75. Return on assets is 10.4%, and total equity is $900,000. What is the equity multiplier? What is the return on equity? What is the net income?
• If the equity multiplier is 2.0 then is the debt ratio 0.5?
• Locker Company has a debt-equity ratio of .65. Return on assets is 9.8 percent, and total equity is $850,000. What is the equity multiplier? Return on equity? Net income? If the SGS Corp. has a 16 p
• What is the return on equity ratio (ROE) in 2014? Use the information in the table for the question. Round answer to two digits. Industry Benchmark Ratios 2014 Description20102011201220132014 Long-term debt700800850750780 Market Value Added 7
• Which one of the following makes the capital structure of a firm irrelevant? A) Taxes. B) 100% dividend payout ratio. C) Interest tax shield. D) Debt-equity ratio that is greater than 0 but less than
• A firm has an ROE of 4%, a debt/equity ratio of 0.5, a tax rate of 30%, and pays an interest rate of 8% on its debt. What is its operating ROA? (Do not round intermediate calculations.Round your answe
• A firm has an ROA of 17% and a debt/equity ratio of 0.65. What is the firm's ROE ?
• 1.What is the total asset turnover? 2.What are the times interest earned ratio? 3.What is the debt-to-equity ratio at the end of this year? 4.What is the equity multiplier?
• Your firm has an ROE of 12%, a payout ratio of 25%, $600,000 of stockholders equity, and $400,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue?
• A company has a 40% debt-to-equity ratio. Its return on assets is 9.80% and the return on levered equity is 13.00%. Assume perfect capital markets and no taxation. What is the interest rate paid by th
• Which of the following statements is true regarding the relationship between the firm's cost of debt and its capital structure (as measured by the debt ratio)? a. The range of debt ratios where the cost of debt begins to increase rapidly varies by firm an
• An investor would be most concerned with which category of ratios? a. Liquidity ratios b. Profitability ratios c. Debt management ratios d. Asset management ratios.
• A short-term creditor would be most interested in: A. profitability ratios. B. asset utilization ratios. C. liquidity ratios. D. debt utilization ratios.
• Thomsen Company has a debt equity ratio of .90. Return on assets is 10.1 percent, and total equity is $645,000. What is the equity multiplier? Return on equity? Net income?
• Suppose Levered Bank is funded with 2% equity and 98% debt. Its current market capitalization is $10 billion, and its market-to-book ratio is 1. Levered Bank earns a 4.22% expected return on its assets (the loans it makes) and pays 4% on its debt. New cap
• Determine whether the following statement is true or false: Debt-to-equity ratio has no effect in the riskiness of a stock.
• A 0.50 (50%) debt-equity ratio would suggest that a firm has:
• Is the following statement true or false: Higher debt utilization ratios will always increase a firm's return on equity, given a positive return on assets.
• Frederico's has a profit margin of 5%, a return on assets of 9%, and an equity multiplier of 1.5. What is the return on equity? a). 6.7% b) 8.4% c)11.2% d) 13.5% e) 19.6%
• A firm has a debt to equity ratio of 40, debt of 250,000, and net income of 100,000. The return on equity is: A. 60 B. 16 C. 30 D. not enough information
• A firm has assets of $240 million, of which $24 million is cash. It has debt of $96 million. If the firm were to repurchase $9.6 million of its stock, what would its new debt-to-equity ratio be? A) 35
• Firm A has debt-total asset ratios of 22% and returns on total assets of 5%. What is the return on equity for firm A (in percentage)?
• Debt/Equity Ratio0.65 Return on Assets9.80% Total Equity$850,000 Compute: a.Equity Multiplier b. Return on Equity c. Net Income
• If the debt ratio is 45%, and ROA is 3%, what is ROE? Find the Equity Multiplier first.
• a.Calculate the 2017 debt-to-capital and times-interest earned ratios. b.How does Leon compare with the industry with respect to financial leverage? c. What can you conclude from these ratios? | A
• Which of the following statements is CORRECT? A) Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC B) Increasing a company's debt rati
• Ratio which measures the short-term solvency of a concern is: a. gross profit ratio. b. operating ratio. c. proprietary ratio. d. current ratio
• Assume the following: Assets = $110,000 Liabilities = $70,000 Net Worth = $35,000 Monthly credit payments = $1,640 Take home pay = $8,200 What is the debt ratio and debt payments ratio for this
• Which of the following statements is MOST correct? A.Because the cost of debt is lower than the cost of equity, value-maximizing firms maintain debt ratios of close to 100%. B.Corporations that are
• Omnicorp has a Debt to Equity ratio of 2, a Fixed Asset Turnover ratio of 3.78, and a cash coverage ratio of 1.63. The company plans to purchase $5,000,000 in new assets this year. a. What is Omnicorp's Debt to Asset ratio? b. How much new debt must Omn
• Ratios that help assess a company's ability to service the interest and repayment obligations on its long-term debt and the degree to which it uses borrowed versus invested financial capital are called _____ ratios.
• A frequently used yardstick of performance in regulated industries is: a. the rate of return on invested capital. b. the ratio of debt to equity. c. market share. d. none of the above.
• A firm has a debt-to-equity ratio of 1.0. If we assume that the firm's debt pays 11% interest annually, the equity has a 19% annual return, and the tax rate is 40%, then what is the firm's WACC?
• SME Company has a debt-equity ratio of 0.80. Return on assets is 8.7 percent, and total equity is $515,000. a. What is the equity multiplier? b. What is the return on equity? c. What is the net income?
• Briefly describe the ratios, that can be used to evaluate a company's ability to pay long-term debt. Briefly describe the ratios that can be used to evaluate a company's profitability. Briefly describ
• Which of the following statements regarding the cost of equity is/are correct? 1) The cost of equity is the rate of return required by equity investors. 2) The cost of equity for a not-for-profit ho
• If ROE is 8%, debt ratio is 55%, what is ROA? Find the Equity Multiplier first. Show work and explain.
• Which one of the following is a working capital decision? A. How should the firm raise additional capital to fund its expansion? B. What debt-equity ratio is best suited to the firm? C. What is the cost of debt financing? D. Which type of debt is best su
• Locker company has a debt-equity ratio of 0.8. Return on assets is 7.3 percent, and total equity is $480,000. (a) What is the equity multiplier? (b) What is the return on equity? (c) What is the net income?
• A firm has an ROE of 2%, a debt/equity ratio of 0.6, a tax rate of 30%, and pays an interest rate of 8% on its debt. What is its operating ROA?
• A firm has an ROE of 5%, a debt/equity ratio of 0.5, a tax rate of 40%, and pays an interest rate of 6% on its debt. What is its operating ROA?
• What is the WACC for a firm with 45% debt and 55% equity that pays 12% on its debt, 20% on its equity, and has a 40% tax rate? (Do not round intermediate calculations.) a. 14.24%. b. 13.16%. c. 16.40%. d. 12.00%.
• The Cole Co. has a return on equity of 13.5 percent, a debt-equity ratio of 0.8, and a total asset turnover of 1.9. What is the return on assets?
• What is the cost of equity for a firm where the required return on assets is 14%, the cost of debt is 11%, and the target debt/equity ratio is 0.5? Ignore taxes.