Question

QUESTION 5 1 pointsSave Answer A firm has a current ratio of 1; in order to improve its liquidity ratios, this firm might a decrease current liabilities by utilizing more long-term debt, thereby increasing the current and quick ratios. b. improve its collection practices by providing extended credit policy. c. increase inventory, thereby increasing current assets and the current and quick ratios. O d. improve its collection practices and pay accounts payable, thereby decreasing current liabilities and decreasing the current and quick ratios. QUESTION6 1 points Save Answer indicates the percentage of each sales dollar remaining after the firm has paid for its goods. a, Gross profit margin b. Earnings available to common shareholders □ c. Net profit margin d, Operating profit margin

Answer 1

Answer to QUESTION 5:

The current ratio measures the company's liquidity, which is the ability to pay off short-term liabilities with short-term assets. The ideal current ratio for a business is 2:1 or higher, implying that it has twice the current assets than current liabilities.

A firm with a current ratio of 1 indicates that it has an equal amount of current assets and current liabilities. To improve its liquidity ratios, the firm might decrease current liabilities by utilizing more long-term debt, thereby increasing the current and quick ratios. So, the correct answer is option A.

Answer to QUESTION 6:

Net profit margin represents the percentage of each sales dollar remaining after the company has paid for its goods. It represents how much revenue is generated per dollar of sales after all expenses have been accounted for.

The formula for calculating the net profit margin is:

Net Profit Margin = Net Income / Total Revenue

So, the correct option is C, i.e., Net profit margin.