Financial leverage multiplier

1.The financial leverage multiplier is an indicator of a corporation utilizing

1.long-term debt.
2.total debt.
3.total assets.
4.operating leverage.

2.The analyst should be careful when conducting ratio analysis to ensure that

1.the same accounting procedures were used.
2.all of these
3.the dates of the financial statements being compared are the same.
4.audited statements are used.
5.the overall performance of the firm is not judged on a single ratio.

3.The analyst should be careful when evaluating a ratio analysis that

1. all of these
2. pre-audited statements are used.
3. the overall performance of the firm may be judged on a single ratio.
4. the dates of the financial statements being compared are the same time.

4.Ratios provide a ________ measure of a company's performance and condition.

1.gross
2. definitive
3. qualitative
4. relative

5.The higher the value of ________ ratio, the better able the firm is to fulfill its interest obligations.

1. debt
2. times interest earned
3. average payment period
4. average collection period

6.In the DuPont system, the return on total assets (asset) is equal to

1. (net profit margin) × (total asset turnover).
2. (return on equity) × (total asset turnover).
3. (net profit margin) × (fixed asset turnover).
4. (return on equity) × (financial leverage multiplier).

Solution Summary

Response discusses financial leverage multiplier