1. Which of the following are false?

a. The EBITDA multiple is useful in determining an acquisition price when a firm is considering buying another firm.

b. The bid quote on a security from a dealer is always greater than the ask quote on a security.

c. Trading on the NYSE is conducted by members of the exchange. The members that execute orders and act as agents on behalf of their clients are floor brokers.

d. The difference between the bid price and the ask price on a security is the asset factor.

2. Which of the following are false?

a. A common size balance sheet shows the firms assets and liabilites as a percentage of total assets.

b. The average collection period is the average number of days an accounts receivable remains outstanding.

c. If a firm wishes to retain the same return on equity when its net profit margin and total asset turnover has declined, it must increase its equity multiplier.

d. An average collection period substantially below the industry norm may indicate that the firm's credit policy is hurting sales by restricting credit to the very best customer.

3. Which of the following are true?

a. Liqudity ratios indicate the firm's capacity to meet its short-term financial obligations and long term financial obligations.

b. Financial leverage ratios indicate the firms capacity to meet its short term financial obligations, but not its long term financial obligations.

c. Asset management ratios indicate how efficiently a firm is using its assets to generate sales.

d. Profitability ratio indicates how effectively a firm generates profits on sales, assets and stockholders' equity.