1. Which of the following transactions could increase a firms current ratio?

a-Sell-off unproductive assets

b- Payment of Accounts Payable

c-Collection of Accounts Receivable

d- All of the above

2. If Abrams Company has an inventory turnover of 7.3 and a receivables turnover of 9.6, approximately how long is its operating cycle?

a-72 days

b-88 days

c-95 days

d-There is not enough information to calculate the operating cycle

3. Which of the following ratios is used to measure the profit earned on each dollar invested by a firms stockholders?

a-Current Ratio

b-Asset Turnover Ratio

c-Return on Sales Ratio

d-Return on Equity

4. Pillsbury Corporation has $65,000 of cost of goods sold and average inventory of $30,000. What is Pillsburys inventory turnover rate?

a-0.46

b-1.17

c-1.46

d-2.17

5. Selected information for Berry Company is as follows:

Average Common Stock	$600,000
Average Additional paid-in capital	$250,000
Average Retained Earnings	$370,000
Sales Revenue for Year	$915,000
Net Income for Year	$240,000

Berrys return on equity, rounded to the nearest percentage point is:

a-20%

b-21%

c-28%

d-40%

7. Which of the following ratios is used to measure a firms profitability?

a- Liabilities / Equity

b-Sales / Assets

c-Net Income / Net Sales

d- Assets / Equity

8. If a company has a higher net profit margin than most of its competitors, this means that:

a-The company is more efficient with its assets

b-The company has more loyal customers

c-The company has a lower proportion of debt financing

d-The company has a higher proportion of each sales dollar that is profit

9. When DuPont analysis reveals that a company has much higher than average asset turnover and much lower than average profit margin, meaning, they move product quickly and sell at below market prices, what can be concluded about the companys strategy?

a-It is a product differentiator

b-It is a low-cost provider

c-It has no strategy

d-It needs to concentrate on improving it profit margins