1. Financial ratios ________.

a

approach 1 if the results are promising

b

facilitate comparisons across time and distance

c

can be used as assumptions in preparing business plans, identify weaknesses, and facilitate comparisons

are not used by managers to understand the performance within their own firm

2. When identifying cash flows, depreciation is ________.

a.

subtracted from gross income

b.

added back to net income

c

subtracted from total sales

d

added to accounts receivable

3. Which of the following is NOT a reason for managers to use financial ratios for internal purposes?

		a. establish the firm's creditworthiness
b		determine incentive pay
	c	judge a supplier's financial status
	d	compare divisions