1. Which statement is true regarding PPE turnover?

Select one:

a. PPE Turnover indicates the amount of PPE sold during the year.

b. PPE turnover is positively related to the size of PPE needed to generate sales.

c. Outsourcing of production tends to decrease PPE turnover.

d. Firms with more productive equipment will tend to have higher PPE turnover.

2. What statement is true regarding sustainable growth?

Select one:

a. If sustainable growth is higher than sales growth, the firm may need to use equity and debt financing to fund future growth.

b. ROA multiplied by Leverage is positively related to sustainable growth.

c. Increasing dividends paid to shareholders increases sustainable growth.

3.

Presented below are select ratios from the Carpotomus Toys annual report:

	Year 2		Year 1
Accounts receivable turnover	5.2x		6.2x
Receivable collection period	60.7 days		54.5 days
Inventory turnover	16.2x		14.6x
Inventory-on-hand period	27.7 days		31.0 days

Which statement is true concerning the above ratios?

Select one:

A. Carpotomus Toys sold more inventory during Year 2 than during Year 1

B. Carpotomus Toys' accounts receivable collection period improved

C. It took Carpotomus Toys longer to collect amounts due from customers during Year 1 than it did during Year 2

D. The company's inventory management improved

4. Which of the following statements is true?

Select one:

a. The return on sales ratio is a measure of solvency.

b. The quick ratio is a measure of firm liquidity.

c. The current ratio is a measure of firm solvency.

d. The debt-to-total assets ratio is a measure of firm liquidity.

5. A higher ratio of long-term-debt-to-shareholders'-equity implies that a business is:

Select one:

a. Likely to generate an operating loss.

b. Relatively more debt financed than previously.

c. Relatively more equity financed than previously.

d. Highly profitable.

6. A higher Current Ratio and Quick Ratio indicates

Select one:

a. More liquidity and less risk

b. Less liquidity and less risk

c. Less liquidity and more risk

d. More liquidity and more risk

7.

The firm reported the following ratios:

Receivable Collection Period 35

Days Payable Period 15

Inventory on Hand Period 50

Days PPE Held 20

What is the cash collection period?

Select one:

a. 30 days

b. 70 days

c. 100 days

d. 90 days

8. Which of the following statements is true for Accounts Payable Turnover?

Select one:

a. A firm with a lower Accounts Payable Turnover may be taking greater advantage of discounts for prompt payment.

b. A firm with a lower Accounts Payable turnover is taking greater advantage of interest-free financing.

c. A higher Accounts Payable Turnover leads to higher Days Payable Outstanding.

d. A higher Accounts Payable Turnover means firm is paying suppliers more slowly.

9. Which of the following statements are true?

Select one or more:

a. Selling inventory faster decreases Cash Collection Period.

b. Paying suppliers faster increases Cash Collection Period.

c. A decrease in the Cash Collection Period means more liquidity.

d. An increase in Cash Collection period means more liquidity.

e. Collecting receivables more slowly decreases Cash Collection Period