1) Liquidity is:

A: a measure of the use of debt in a firm's capital structure.

B: equal to current assets minus current liabilities.

C: equal to the market value of a firm's total assets minus its total liabilities.

D: valuable to a firm even though liquid assets tend to be less profitable to own.

E: generally most associated with intangible assets.

2) If a firm's financial managers successfully meet their primary goal, then the firm's:

A: debts will exceed its equity.

B: market value will exceed its book value.

C: net working capital will exceed its long-term debt.

D: carrying value will exceed its market value.

E: equity will exceed its assets.

5) The book value of assets:

A: is determined under Generally Accepted Accounting Principles (GAAP) and is based on the cost of those assets.

B: represents the true market value of those assets according to GAAP.

C: is always the best measure of the company's value to an investor.

D: is always higher than the replacement cost of the assets.

E: is shown on the firm's income statement.

10) Southwest Co. has equipment with a book value of $3,560 that could be sold today for $3,900. Its inventory is valued at $1,780 and could be sold immediately to a competitor at a discount of 25 percent. The firm has $260 in cash and customers owe the firm $950, of which 98 percent is collectible. What is the current market value of the firm's assets?

A: $6,086

B: $5,536

C: $6,426

D: $6,316

E: $5,946