Bsg Quiz 2 |36 Questions| With Correct Answers.

Earnings Per Share formula {Ans: Net income/number of shares of stock issued to stockholders.}A default risk ratio below ___ is automatically assigned "high risk" {Ans: 2.0}Operating Profit Margin (equation) {Ans: Operating profit/net sales revenue x 100}True or False: The debt-to-asset ratio and default risk ratio are the two most important measures in determining a company's credit rating. {Ans: False. The interest coverage ratio and the debt-to-assets ratio are the two most important measures in determining a company's credit rating. However, it is difficult to achieve an A or A+ credit rating without having a default risk ratio that is at least close to 4.0.}What does the current ratio measure? {Ans: The company's ability to pay its current liabilities as they become due.}Default Risk Ratio (defined) {Ans: Cash flow from operations is divided by combined annual principal payments on all outstanding loans; cash flow operations equals net profit plus deprecation.}Profitability Measures - what are a company's three types of profit margins? {Ans: 1. Gross Profit Margin 2. Operating Profit Margin 3. Net Profit Margin}Higher EPS means {Ans: a company is earning more net income per share stock outstanding (more profitability).}Sometimes called "net return