1. The relative proportion of short-term and long-term assets is largely determined by a company's business model. Which company is more likely to have the highest and lowest ratio of short-term assets to long-term assets?

Highest Lowest

A) Cisco Systems McDonald's

B) McDonald's Cisco Systems

C) Caterpillar Cisco Systems

D) Procter & Gamble Target

2. The relative proportion of nonowner (liabilities) and owner (equity) financing is largely determined by a company's business model. Which company is more likely to have the highest and lowest ratio of liabilities to equity?

Highest Lowest

A) Caterpillar McDonald's

B) Caterpillar Apple

C) Caterpillar General Motor

D) Google Apple

3. Net profit margin (net income divided by sales) represents the relative profitability. Differences exist in the relative profitability of companies across industries and business models play a critical role in determining company profitability. Which company is more likely to have the highest and lowest net profit margin?

Highest Lowest

A) Caterpillar McDonald's

B) Caterpillar Apple

C) Caterpillar General Motor

D) Apple Target

4. Which financial statement generally is prepared first?

A) Balance sheet

B) Income statement

C) Statement of cash flow

D) Statement of stockholders' equity

5. There are two types of business model: Model A has relative high profit margin and low asset turnover and Model B has relative low profit margin and high asset turnover. Both models can earn the same rate of return on invested equity capital. Which of the combination is more likely to be true?

Model A Model B

A) Home Depot Target

B) Google Cisco System

C) Google Target

D) Home Depot Cisco System