Chapter 7 Review (see what idk)

Question 1

when analyzing the balance sheet, what do we look at?

Answer 1

The links between financial statements

Question 2

What are loan covenants?

Answer 2

It’s the terms and conditions of a loan that require the borrower to meet specific requirements

Question 3

What is the return on assets?

Answer 3

It is a ratio that shows is we are effective assets are at generating net income.

Question 4

how to see if company is effectively using its assets?

Answer 4

+ Requires knowledge of the industry and competitors

Question 5

Is this ratio better higher or lower

Answer 5

HIGHER

Question 6

What is return on equity?

Answer 6

How effective a company is using their shareholders investment to generate income

Question 7

Is higher better?

Answer 7

YES 100%

Question 8

How do we see if a company is effective with their return on equity?

Answer 8

Should be compared to peers and previous data

Question 9

What is ‘asset turnover’?

Answer 9

Indiciates how well a company is using assets to generating sales.

Question 10

Is higher better?

Answer 10

i guess