Reference no: EM132753894

Problem 1: When comparing inventory turnover ratios, other things being equal

Select one:

a. a lower inventory turnover is preferred in order to keep inventory costs low.
b. a higher inventory turnover is preferred to improve liquidity.
c. higher inventory turnover results from old or obsolete inventory increasing the inventory balance on the balance sheet.
d. higher inventory turnover results from an increase in the selling price of the product.

Problem 2: Which of the following ratios would be the most useful to assess the risk associated with a firm being able to pay off its short-term line of credit?

Select one:

a. return on equity
b. the acid-test (or quick) ratio
c. the operating profit margin
d. the fixed asset turnover