QUESTION: 161

The general purpose of is to aid in making some quantifiable assessments of the long-term solvency of the business and its ability to deal with financial problems and opportunities as they arise.

Capital Structure
Balance sheet leverage ratio
Both A and B are same
Liquidity ratios

Answer(s): C

Reveal Solution Next Question

QUESTION: 162

The coverage of fixed charges is a more inclusive ratio than the times-interest-earned ratio in that:

It excludes coverage of the items in addition to variable earnings
It excludes coverage of the items in addition to interest
It includes coverage of the items in addition to fixed earnings
It includes coverage of the items in addition to interest

Answer(s): D

Reveal Solution Next Question

QUESTION: 163

Once in a while, someone --perhaps a broker trying to sell a business --quotes return on equity computed on a pretax basis. This definition can be very misleading, since:

Income taxes are very a real cost
Inclusion of income taxes is compulsory
Operating Profit from sales is very significant
Taxes are calculated on annual basis

Answer(s): A

Reveal Solution Next Question

QUESTION: 164

Due to these complexities, for practical purposes it is acceptable to use the ratio as we defined it. However, the analyst is well advised to research:

the subject companies' use of short-term debt
the guideline companies' use of short-term
Both the subject and guideline companies' use of short-term debt to determine whether to adjust this ratio to include all interest-bearing debt
Whether to adjust this ratio to include all interest-bearing debt

Answer(s): C

Reveal Solution Next Question

Free ABV Exam Braindumps (page: 42)

QUESTION: 161

QUESTION: 162

QUESTION: 163

QUESTION: 164

ABV Discussions & Posts