A potential creditor\'s judgment about granting credit would be most influenced

Question

A potential creditor's judgment about granting credit would be most influenced by the potential customer's:

Select one:

a. current ratio at the end of the prior fiscal year.

b. most recent acid-test ratio.

c. trend of acid-test ratio over the past three years.

d. practice with respect to taking cash discounts offered by current suppliers.

Question 22

Which of the following is(are) an example of a measure of leverage?

Select one:

a. Debt yield.

b. Debt payout ratio.

c. Preferred dividend coverage ratio.

d. Debt/equity ratio.

Question 23

The first caption in most income statements in annual reports is:

Select one:

a. gross sales.

b. net sales.

c. earned revenues.

d. sales, less sales returns and allowances.

Question 24

The purpose of reporting Current Maturities of Long-Term debt is to:

Select one:

a. report any portion of a long-term borrowing that is to be paid in the upcoming accounting period as a current liability.

b. reclassify a portion of debt from the noncurrent section of the balance sheet to the current section of the balance sheet.

c. properly classify liabilities.

d. all of these.

Question 25

The dividend payout ratio describes:

Select one:

a. the proportion of earnings paid as dividends.

b. the relationship of dividends per share to market price per share.

c. the percentage change in dividends this year compared to last year.

d. dividends as a percentage of the price/earnings ratio.

Explanation / Answer

21. answer d) practice with respect to taking cash discounts offered by current suppliers.

22. answer d) Debt/equity ratio.

23. answer b) net sales

24. answer d) all of these

25. answer a) the proportion of earnings paid as dividends.

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