12. The quick ratio (acid test) a. is unaffected by selling inventory at cost b. exceeds the current ratio c. is increased when long-term debt is retired d. is less than the current ratio 13. The current ratio is increased when stock is sold and the proceeds used to a. retire bonds b. purchase plant and equipment c. retire accounts payable d. pay cash dividends 14. An increase in inventory turnover may imply that a. sales are lower b. the price of the product has been reduced c. accounts receivable are collected faster d. the level of inventory has increased 15. Ifa firm collects its accounts receivable, a. the current ratio increases b. inventory turnover increases c. the average collection period is reduced d. inventory is reduced 16. Profitability ratios measure a. liquidity b. leverage c. performance d. turnover 17. The DuPont system of financial analysis combines a. profitability and turnover b. liquidity and turnover c. profitability and liquidity d. turnover and coverage 18. The higher the times-interest-earned a. the riskier is a debt issue b. the more subordinated the debt issue c. the safer are interest payments d. the smaller is the amount of outstanding debt 19. The more rapidly receivables turn over a. the more rapidly the firm is receiving cash b. the larger are the firm's sales c. the smaller is the firm's inventory d. the larger are the firm's accounts payable 20. The larger the debt ratio a. the more equity the firm is using b. the riskier the firm becomes c. the larger are the firm's total assets d. the smaller is the firm's use of financial leverage 21. The net profit margin a. is usually less than the operating profit margin b. exceeds the operating profit margin c. is not affect by taxes paid by the firm d. is reduced by interest earned