Questions from Financial Management


Q: Why is EBIT an important line item in the income statement?

Why is EBIT an important line item in the income statement? What does EBIT show us?

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Q: The industry average inventory turnover ratio is 7 and your company's is

The industry average inventory turnover ratio is 7 and your company's is 15. This could be good or bad news. Explain each possibility. How would you find out whether or not it is bad news?

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Q: What is meant by liquidity in financial statements?

What is meant by liquidity in financial statements?

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Q: What are the common misstatements of balance sheet figures and why do

What are the common misstatements of balance sheet figures and why do they present a problem?

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Q: Do the definitions of current assets and current liabilities suggest a quick

Do the definitions of current assets and current liabilities suggest a quick way of looking at the firm's ability to meet its financial obligations (pay its bills) over the near term? (Hint: Think in...

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Q: How are capital and working capital different?

How are capital and working capital different?

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Q: What is leverage and how does it work? What is the

What is leverage and how does it work? What is the main concern about using it?

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Q: Define the term tax base and discuss common bases. What government

Define the term tax base and discuss common bases. What government units’ tax on each? What are these taxes commonly called?

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Q: List the main user groups of financial information. What are the

List the main user groups of financial information. What are the reasons for their interest?

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Q: Why do we need the quick ratio when we have the current

Why do we need the quick ratio when we have the current ratio?

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