1. (TRUE or FALSE?) Times interest earned ratio provides a relative measure of how well the firms operating earnings can cover current interest obligations.

2. (TRUE or FALSE?) Quick ratio provides a measure of the long-term liquidity of the firm, because the quick ratio magnifies the effects of inventory which is generally the most liquid of the firms current assets.

3. (TRUE or FALSE?) Return on equity is probably the most important accounting ratio that measures the bottom-line performance of the firm with respect to the equity shareholders.

4. (TRUE or FALSE?) Just like the NPV method, the IRR method does not consider all cash flows for a project and does not adjust for the time value of money.

5. (TRUE or FALSE?) The NPV provides a direct (dollar) measure of how much a capital project will increase the value of the firm.

6. (TRUE or FALSE?) A projects net present value is the number of time periods it will take before the cash inflows of a proposed project equal the amount of the initial project investment (a cash outflow).

7. (TRUE or FALSE?) Net working capital management covers current assets and current liabilities.

8. (TRUE or FALSE?) Sarbanes-Oxley (S O X) regulations increased reporting requirements and responsibility of corporate directors.

9. (TRUE or FALSE?) General partners have limited liability.

10. (TRUE or FALSE?) Money expected or promised in the future is worth more than the same amount of money in hand today.

11. (TRUE or FALSE?) Interest on interest is the interest earned only on the original principal amount invested.

12. (TRUE or FALSE?) The time value of money implies that a dollar received today is worth less than a dollar to be received in the future because funds received today cannot be invested to earn a return.

13. (TRUE or FALSE?) Total liabilities and owners equity = Current liabilities + Long-term debt + Owners equity.

14. (TRUE or FALSE?) For a successful company that is rapidly expanding, capital outlays would typically be large, possibly leading to negative cash flow from assets.

15. (TRUE or FALSE?) Accounting, or historical, costs are very important to financial managers, while market values are not.