Which of the following ratios gives a perspective on risk in the capital structure ?
Book value per share
Degree of financial leverage
Price / earnings ratio
Which of the following items will be reported on the income statement as part of net income?
Prior period adjustment
Unrealized decline in market value of investments
Foreign currency translation
Gain from selling land
Book value per share may not approximate market value per share because
Investments may have a market value substantially above the original cost.
Land may have substantially increased in value.
Market value reflects future potential earning power.
All of the above
If a firm’s gross profit has declined substantially, this could be attributed to all but which of the following reasons?
The cost of buying inventory has increased more rapidly than selling prices.
Selling prices have declined due to competition.
Selling prices have increased due to competition.
Theft is occurring.
Which of the following is considered to be a recurring item?
Cumulative effect of change in accounting principle
Will increase by 13.0%
Will increase by 13.
Will decrease by 13.0%
Will decrease by 13.
Earnings based on percent of holdings by outside owners of consolidated subsidiaries are termed
Earnings of subsidaries
Which of the following is not a type of operating asset?
The earnings per share ratio is computed for
Increasing financial leverage can be a risky strategy from the viewpoint of stockholders of companies having
Steady and high profits
Low and falling profits
Relatively high and increasing profits.
A low debt/equity ratio and relatively high profits.