Principles of Managerial Finance, 15th Edition

Self-Test Problems

(Solutions in Appendix)

1. Learning Goals 3, 4, 5

   ST3–1 Ratio formulas and interpretations Without referring to the text, indicate for each of the following ratios the formula for calculating it and the kinds of problems, if any, the firm may have if that ratio is too high relative to the industry average. What if the ratio is too low relative to the industry average? Create a table similar to the one that follows and fill in the empty blocks.

   Ratio	Too high	Too low
   $\text{Current ratio}=$
   $\text{Inventory turnover}=$
   $\text{Times interest earned}=$
   $\text{Gross profit margin}=$
   $\text{Return on total assets}=$
   $\text{Price/earnings (P/E) ratio}=$

1. Learning Goals 3, 4, 5

   ST3–2 Balance sheet completion using ratios Complete the 2019 balance sheet ...