1). Which of the following ratios will usually have the lowest percent?

		return on investment
		return on total equity
		return on common equity
		return on total assets
		there is not enough information to tell

2). A firm has a degree of financial leverage of 1.20. If earnings before interest and tax increase by 20%, then net income:

		will not necessarily change
		will increase by 20%
		will decrease by 24%
		will decrease by 20%
		none of the answers are correct

3). Which of the following is not a reason to interpret book value with caution?

		Land may be worth more than it cost.
		Depreciable assets may be held.
		Investments may be worth more than their purchase price.
		Patents may have a high market value.
		All of the answers are correct.

4). Management should not use the statement of cash flows for which of the following purposes?

		To determine dividend policy.
		To determine cash flow from operations.
		To determine cash flow from investing activities.
		To determine cash flow from financing activities.
		To determine the balance in accounts receivable.

5). Which of the following should not be considered as part of "cash and cash equivalents"?

		cash on hand
		cash on deposit
		highly liquid investments
		investments in short-term securities (<90 day maturity)
		cash restricted for retirement of bonds

6). Which of the following accounts will not be considered when computing cash flow from operations?

		accounts receivable
		inventories
		equipment
		accounts payable
		taxes payable