14. Sales personnel who are paid a bonus for exceeding budgeted sales have an incentive to underestimate sales when establishing the sales budget. 15. A current ratio of greater than LO would indicate that current assets exceed current liabilities 16. The price earnings ratio measures the premium investors are willing to pay for a company's stock relative to its earnings. 17. Helden Company has a profit margin ratio of 10%. This means that for every dollar of net sales the company makes it generates ten dollars in net income. 18. A relatively high price earnings ratio indicates investors expect favorable future earnings 19. Free cash flow provides information regarding how much cash generated from daily operations is remaining after investing in fixed assets. 20. An operating budget is similar to a capital budget in that both are long-term budgets. 21. The cost-plus approach is the best approach for establishing transfer prices for all companies. Multiple Choice (5 Points) 22. Which of the following types of analyses would show whether sales increased by $160.000 from one year to the next? a. A receivables turnover analysis. b. A common-size analysis. c. A trend analysis. d. A profit margin ratio analysis. e. None of the answer choices is correct. 23. Which of the following best describes an operating budget? a. An estimate of cash expenditures for long-term assets. b. A short-term budget that focuses on the daily operations of the organization c. A series of budget schedules outlining the organization's plans for the next three years. d. An estimate of all operating costs other than production e. None of the answer choices is correct