1. The so-called “Burn Rate” refers to
a. how fast a firm is selling its inventory.
b. the highest debt interest rate that a firm has.
c. how fast a firm is spending its available cash.
d. short term financial risk.
2. When analyzing the Debt Ratio the most logical other financial ratio to analyze is the
a. Current Ratio.
b. Times Interest Earned.
c. ROE.
d. ROA.
3. The difference between the ROE and ROA tells us
a. nothing.
b. how much equity is invested in the firm.
c. how much return is generated by the firm.
d. how much return is generated by financial leverage as opposed to operational leverage.
4. A so-called “Technical Default” refers to
a. not paying the required interest rate on debt.
b. a reduction in sales due to a problem with Property, Plant, and Equipment.
c. a violation of a debt covenant.
d. the situation when Rd > ROA, so unfavorable leverage.