Course 4 Week 3

Question 1

John Jacob’s company recorded $60,000 in sales revenue and a cost of goods sold of $45,000 on their income statement this month. What is their percentage Gross Profit Margin? (Enter the answer as a whole number and without the % sign)

Answer 1

Correct! Using the formula (Sales Rev - COGS) / Sales Rev, John Jacob’s company would have a 25% Gross Profit Margin.

Question 2

Sally’s Seashells company Income Statement shows that they have a Sales Revenue of $60,000 and Operating Earnings of $11,000. What is their percentage Operating Profit Margin? (Enter the answer as a whole number and without the % sign)

Answer 2

Correct! Using the formula Operating Earnings / Sales Revenue, Sally’s Seashells company would have an Operating Profit Margin of 18%.

Question 3

Harry’s Wizarding Wands company recorded a net profit of $8,500 in addition to their Sales Revenue of $60,000 on their recent income statement. What is their Net Profit Margin? (Enter the answer as a whole number and without the % sign)

Answer 3

Correct! Using the formula Net Income / Sales Revenue, Harry’s Wizarding Wands would have a Net Profit Margin of 14%.

Question 4

What does the debt to equity ratio evaluate?

Answer 4

What proportion of debt or equity a company is using to finance its assets

Question 5

If a company has $30,000 debt and $60,000 equity, what is its debt to equity ratio?

Answer 5

Correct! The debt to equity ratio would be 0.5.

Question 6

Which of the following statements is incorrect?

Answer 6

The higher the debt-to-equity ratio, the more profit the company has recorded

Question 7

True or False: Generally, a high AP ratio indicates that you satisfy your accounts payable obligations quickly.

Answer 7

True

Question 8

Gross Profit Margin

Answer 8

it shows the percentage of revenue that exceeds the cost of goods

Question 9

How can you create a greater gross profit margin

Answer 9

Lowering costs or raising prices

Question 10

Formula For Gross Profit Margin

Answer 10

(Sales Revenue-COGS)/Sales Revenue

Question 11

Operating Margin

Answer 11

measurement of profit after paying expense but before taxes

Question 12

How can you increase the operating margin

Answer 12

raise prices, lower expense, lower cogs

Question 13

Operating Margin formula

Answer 13

Net Profit/Sales Rev

Question 14

Current Ratio

Answer 14

is the ratio that shows a company’s ability to pay current debts

Question 15

What is the current ratio formula

Answer 15

Current Assets / Current Liabilities

Question 16

What’s a good and bad current ratio

Answer 16

> 1 Good
<1 Bad

Question 17

Debit to Equity Ratio

Answer 17

Total Debit to Total Equity

Question 18

D/E formula

Answer 18

Total Liabilities / Total Equity

Question 19

What’s a safe and risky D/E ratio

Answer 19

Below 1 is safe
Above 2 is risky

Question 20

What is the Tech Industry D/E

Answer 20

2 of below, they tend to have alot of R&D

Question 21

What is the Banking Industry D/E

Answer 21

10, they borrow high amounts to lend high amounts

Question 22

What is the Large Manufactures D/E

Answer 22

2-5

Question 23

What is Big Pharma D/E

Answer 23

70, this sector is high capital sensitive

Question 24

Accounts Payable Turnover

Answer 24

is a ratio that shows how fast a company pays back their debts

Question 25

APT Formula

Answer 25

APT = Net Credit Purchase/ Average Accounts Payable

Question 26

How do you find Average Accounts Payable

Answer 26

Starting AP + Ending AP divided by 2

Question 27

What do you do after Net Credit Purchases/AAP

Answer 27

Divide 365 by that ratio

Question 28

What is ART

Answer 28

Accounts Receivable Turnover

Question 29

ART formula

Answer 29

Net credit sales/ Average Accounts Rec

Question 30

DigiWidgit recorded operating cash flows totaling $152,000 and the total debt payable for the year was $77,000 What is their Cash Flow Coverage Ratio? (Enter your answer to the one-hundredth position, x.xx)

Answer 30

Correct! Their Cash Flow Coverage Ratio is 1.97.

$152,000 / $77,000 = 1.97

Question 31

Vegg Delivery recorded current liabilities of $44,000 at the year’s start, current liabilities of $67,000 at year’s end, and Cash Flow from Operating Activities of $120,000. What is their Current Liability Coverage Ratio? (enter your answer to the one-hundredth position, x.xx)

Answer 31

Correct
Correct! Their Current Liability Coverage Ratio is 2.16.

($44,000 + $67,000) / 2 = $55,500

$120,000 / $55,500 = 2.16

Question 32

Superior Suits recorded a cash flow from operations of $48,750 and net sales of $87,000. What is their Operating Cash Flow Margin ratio? (enter your answer to the one-hundredth position, x.xx)

Answer 32

Correct
Correct! Their Operating Cash Flow Margin Ratio is 0.56.

$48,750 (cash flow from operations) / $87,000 (net sales) = 0.56

Question 33

What is Cash flow cover ratio

Answer 33

Company ability to pay long term debt, can it pay it’s debit obligations. Higher the ratio the better. Tends to be over 1

Question 34

What is the formula for Cash flow cover ratio

Answer 34

Cash Flow from operation/ Total debt

Question 35

What is Current Cash Debt ratio

Answer 35

Company ability to pay current debt, higher the better

Question 36

What is Current Cash Debit Ratio Formula

Answer 36

Net Cash from operating/ average current liabilities

Question 37

What is the the cash flow margin ratio

Answer 37

The ability to convert sales into cash flow in a percentage form. Above 50 % is good

Question 38

What is the cash flow margin ratio

Answer 38

Cash Flow from operating/net sales

Question 39

What is a big tip for communicating with a client

Answer 39

Short and Sweet