C. fixed costs
D. interest expense
E. depreciation tax shield
The Corner Hardware has succeeded in increasing the amount of goods it sells while
holding the amount of inventory on hand at a constant level. Assume that both the cost
per unit and the selling price per unit also remained constant. This accomplishment will
be reflected in the firm's financial ratios in which one of the following ways?
A. decrease in the inventory turnover rate
B. decrease in the net working capital turnover rate
C. no change in the fixed asset turnover rate
D. decrease in the day's sales in inventory
E. no change in the total asset turnover rate
Individuals who continually monitor the financial markets seeking mispriced securities:
A. earn excess profits over the long-term.
B. make the markets increasingly more efficient.
C. are never able to find a security that is temporarily mispriced.
D. are overwhelmingly successful in earning abnormal profits.
E. are always quite successful using only historical price information as their basis of
The aftertax cost of debt:
A. varies inversely to changes in market interest rates.
B. will generally exceed the cost of equity if the relevant tax rate is zero.
C. will generally equal the cost of preferred if the tax rate is zero.
D. is unaffected by changes in the market rate of interest.
E. has a greater effect on a firm's cost of capital when the debt-equity ratio increases.