1.

Assume the current ratio for Allegheny Supply Co. is 2 to 1. If the company purchased supplies on credit, the effect of this transaction is to

a.increase the current ratio.

b.decrease the current ratio.

c.have no effect on the current ratio.

d.decrease cash.

2.

Which of the following is a measure of the time that it takes to convert current assets into cash?

a.Working capital.

b.Accounts receivable turnover ratio.

c.Number of days' sales in inventory.

d.Cash-to-cash operating cycle.

3.

To review the current market price of the stock, one should review the

a.statement of cash flows.

b.income statement.

c.balance sheet.

d.None of these choices are correct.

4.

Which of the following ratios is used to analyze a company's liquidity?

a.Earnings per share.

b.Inventory turnover ratio.

c.Asset turnover ratio.

d.Return on assets ratio.

5.

Which of the following will decrease working capital?

a.Purchase of merchandise on credit.

b.Collection of accounts receivable.

c.Purchase of a new computer with cash.

d.Payment of salaries payable.