1.Ratio Analysis of a firm\'s financial statements is only meaningful if ratios

Question

1.Ratio Analysis of a firm's financial statements is only meaningful if ratios are compared to an appropriate standard OR they are part of a trend analysis of firm activities over time. Those comparables are called BENCHMARKS. a.true b.false 2.Deterioration in a firm's Times-Interest-Earned Ratio MAY BE an indication that the firm is in jeopardy of defaulting on its debt obligations. a.true b.false

3. Financial accounting statements and tax returns are prepared using the SAME SET of rules and principles. a.true b.false

4. The goal of financial management is to MAXIMIZE the PROFIT which a company generates through effective and efficient use of its assets. a.true b.false

5.Accountants are generally interested in determining a business' NET INCOME, while financial managers are more interested:

a.Net Working Capital (NWC)

b.Cash Flows (CF)

c.Capital Budgeting

d.Capital Structure

6.The NET FIXED ASSETS account balance on a firm's Balance Sheet is EQUAL to the CURRENT MARKET VALUE of the firm's fixed assets.

7.Which one of the following is a SOURCE of cash?

8.Assume a company has the following account balances: Cash ($5,000); Accounts Receivable($11,000); Inventory ($24,000); Accounts Payable ($6500) Acccruals ($2000); Long term Debt ($25000). What is the firm's QUICK RATIO?

Explanation / Answer

1) true 2)true 3)false 4)true 5)b.Cash Flows 6)false 7)c.Paying dividend to current shareholders

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