BEC Ratio definitions

Question 1

What ratio is used to evaluate profitability?

Answer 1

Gross margin

Question 2

What does the current ratio measure

Answer 2

liquidity

Question 3

The return on equity ratio measures profitability from who’s point of view

Answer 3

shareholder

Question 4

Return on equity ratio does not consider

Answer 4

debt

Question 5

What does the debt to total asset ratio measure

Answer 5

financial stability

Question 6

Do you want WACC to be higher or lower?

Answer 6

Lower - you want to minimize cost

Question 7

Capital Asset pricing model

Answer 7

describes the relationship between risk and expected rates of return

Question 8

The beta coefficient

Answer 8

compares the returns of the asset to the market rate over a period of time and to the market premium

Question 9

Constant growth ratio

Answer 9

used to determine the current price of a share relative to its dividend payments

Question 10

Cost of capital

Answer 10

represents a threshold rate that a company must pass through in order to generate positive return