Working Capital Management Final Exam Questions With Complete Solutions Liquidity and Working Capital Ratios - Correct Answers ✅Measures firms ability to pay its payment obligations and cash management efficiency Current Ratio - Correct Answers ✅TCA/TCL Quick Ratio - Correct Answers ✅(Cash + S-T Inv. + A/R)/Total Current Liabilities Cash flow to total debt ratio - Correct Answers ✅(Net Income + Depr.)/Short and long term debt Low ratio means youre in trouble. inability to repay debt Working Capital Ratio - Correct Answers ✅CA-CL Efficiency and Asset Management Ratios - Correct Answers ✅How well you are utilizing your assets Total Asset Turnover - Correct Answers ✅Revenues/Total Assets Measures how many times the asset base is turned over with the flow of revenue Fixed Asset Turnover - Correct Answers ✅Rev/Net Prop, plant, equip 1 / 2
Working Capital Management Final Exam Questions With Complete Solutions Current asset turnover - Correct Answers ✅Rev/Current Assets Cash Conversion Efficiency - Correct Answers ✅Measures the efficiency with which a company converts sales into cash =Cash flow from Ops/Sales Debt Management Ratios - Correct Answers ✅Measures level of debt and ability to service it Total liabilities to total assets - Correct Answers ✅TL/TA Long term debt to Capital - Correct Answers ✅Measures the % of a company's capitalization that is provided by long- term debt Long-term debt/Long-term debt +Equity Debt to tangible net worth - Correct Answers ✅Measures a company's debt as a % of its tangible net worth Total Debt/(Total Equity-INtangible Assets) Times Interest Earned Ratio - Correct Answers ✅Measures a firm's ability to service debt through interest payments Operating Profit/Interest Expense
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