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1. Which of the following transactions affects the acid-test ratio? A:A new common stock issue is sold and equipment purchased. B:Receivables are collected. C:Inventory is

1. Which of the following transactions affects the acid-test ratio?

A:A new common stock issue is sold and equipment purchased.

B:Receivables are collected.

C:Inventory is liquidated for cash.

D:New common stock is sold and used to retire a debt issue.

2. Long-term creditors are likely to be least interested in a firm's A: liquidity ratios.

B:coverage ratios.

C:profitability ratios.

D:debt ratios

3. A firm's annual credit sales are $1.2 million and its average receivables are $150,000. Assuming a 360-day year, the average collection period is

A;20

B:45

C:30

D:60

4If an analyst wanted to compute a rough measure of a firm's financial risk, which of the following types of ratios would be preferred?

A:liquidity ratios

B:coverage ratios

C:profitability ratios

D:debt ratios

5. Firm A has a total asset turnover ratio of 5, a net profit margin of 2 percent, and return on equity of 15 percent. Its return on assets is

A:10

B:6

C:3

D:2

6.Common size income statements divide each account by:

A: revenues

B:total Assets

C:net Income

D:none of the above

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