1. After making all your forecasts for next year, you are left with accounts payable that will be $10,000 higher than this year. Which implication does this have for the next year?

A. Your sales must increase by $10,000 over your forecast.

B. Your retained earning will be reduced by $10,000.

C. You will need an additional $10,000 in paid-in-capital.

D. Your payable have been incorrectly forecasted.

2. Which ratio indicates the market expectations of the highest potential for future growth?

A. ABC inc., with a P/E ratio of 55

B. XYZ inc., with a P/E ratio of 25

C. JKL inc., with a debt ration of 75

D. EFG inc., with a current ration of 4

3. Why should a company prepare forecasted financial statements?

A. to satisfy the reporting requirements of the Securities and Exchange Commission.

B. to set a baseline against which to compare future results.

C. to present growth estimates to potential investors.

D. to try options out on paper before implementing them.

4. Why is the DuPont framework used in analyzing a company's performance?

A. to determine a company's profitability.

B. to understand why a company's ROE has changed.

C. to determine the return on investment for a company.

D. to understand changes in a company's efficiency.

5.Which company would have the lowest price-to-sales ratio?

A. LMN Corp. has a 6.5% return on sale, and 3.5% expected sales growth.

B. EFG Inc. has a 3.5% return on sales, and 4.5% expected sales growth.

C. RST Inc. has a 6.5% return on sales, and 5.0% expected sales growth.

D. ABC Corp. has a 3.5% return on sales, and 3.5% expected sales growth.

6.When you are analyzing your company's financial performance, which ratio shows you the company's liquidity?

A. price-eating ratio

B. debt ratio

C. return on equity ratio

D. current ratio