1)

33. MC.13-085

The current ratio

a.is larger when a company is more liquid.

b.is generally smaller than the quick ratio.

c.increases when a company allows more customers to charge on account instead of collecting cash.

d.decreases when a company becomes more liquid.

2)

Auto Industries Company reported the following on its income statement:

Income before income taxes	$420,000
Income tax expense	(120,000)
Net income	$300,000

If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?

a.5.25 times.

b.6.25 times.

c.5 times.

d.8 times.