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Measure of use of resources, PE ratio, debt ratio, managemen

Management's use of resources can best be evaluated by focusing on measures of:
a. liquidity.
b. activity.
c. leverage.
d. book value.

A higher P/E ratio means that:
a. the stock is more reasonably priced.
b. the stock is relatively expensive.
c. investors are wary of the stock.
d. earnings are expected to decrease.

If a firm's debt ratio were 25%, its debt/equity ratio would be:
a. 25%.
b. 50%.
c. 33.33%.
d. 75%.

Activities included in a generally accepted definition of management accounting include:
a. planning, organizing, controlling
b. planning, operating, reporting
c. preparing, operating, creating
d. preparing, organizing, converting

Which of the following statements does not describe a characteristic of management accounting?
a. Management accounting must conform to GAAP.
b. Approximate amounts rather than accurate amounts or refined estimates are often used in management accounting.
c. Management accounting places a great deal of emphasis on the future.
d. Management accounting is more concerned with units of the organization rather than with the organization as a whole.

Which of the following is another term for mixed costs?
a. semifixed costs.
b. semivariable costs.
c. component costs.
d. none of these.

Knowledge about the behavior pattern of a cost is important to understanding the effect on net income of a change in sales volume because as sales volume changes:
a. net income will change proportionately.
b. the effect on net income will depend on the behavior pattern of various costs.
c. fixed costs will rise proportionately.
d. variable costs will not change.

Solution Preview

Management's use of resources can best be evaluated by focusing on measures of:
b. activity.
It helps in understanding of utilization of resources like assets.

A higher P/E ratio means that:
b. the stock is relatively expensive.

If a firm's debt ...

Solution Summary

Response discusses the measure of use of resources, PE ratio, debt ratio, management accounting, mixed costs

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