What does a debtor day ratio measure?

Number of days it takes to collect money from debtors

What is the formula for gearing ratio?

Long-term liabilities over capital employed times 100, Loan capital over capital employed times 100

What is the formula for stock turnover (number of times)?

Cost of goods sold divided by average stock

What is not a strategy to improve the efficiency position of a firm?

Eliminate need to hold small amounts of stock

What are efficiency ratios?

Show how well a firm's resources have been used

Examination questions typically ask students to use financial ratios to comment on a firm's:

Profitability, Efficiency position, Gearing

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3.6 Efficiency and Ratio Analysis

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Questions 11

Answers

1
What does a debtor day ratio measure?
Debtors
Number of days it takes to pay debtors
Number of years it takes to collect money from debtors
Number of days it takes to collect money from debtors
2
Bonus: T/F Jack is better than Drew
True
Of course
False
No way
3
What is the formula for gearing ratio?
Long-term liabilities over capital employed times 100
The krabby patty secret formula
Current assets over current liabilities
Loan capital over capital employed times 100
4
What is the formula for stock turnover (number of times)?
Creditors divided by cost of goods sold
Cost of goods sold divided by average stock
Average stock divided by cost of goods sold
Love
5
A gearing ratio of over 50% is good for ________.
Smaller companies staying where they are
Large companies expanding
Companies with little growth potential
No company ever
6
What is not a strategy to improve the efficiency position of a firm?
Improve credit control
Close relationships with the customers
Eliminate need to hold small amounts of stock
Close relationships with the creditors
7
Which is not a factor that the level of gearing depends on?
Potential profitability
Level of interest rates
State of the economy
Size of the business
8
Which is not an example of an efficiency ratio?
Stock turnover
Debtor days
Gearing
Margin of safety
9
What are efficiency ratios?
Used to assess a firm's long-term liquidity
Measures the number of times a business sells its stocks
Show how well a firm's resources have been used
A type of watermelon
10
Examination questions typically ask students to use financial ratios to comment on a firm's:
Profitability
Efficiency position
Gearing
Liquidity ratio
11
A hand-made ukulele is an example of a product in what kind of market?
Niche market
Drip market
Direct market
ukulele

3.6 Efficiency and Ratio Analysis Flashcards | StudBud