18. Casey Communications recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. This action had no effect on the companys total assets or operating income. Which of the following effects would occur as a result of this action?

A. The companys current ratio increased. B. The companys times interest earned ratio decreased. C. The companys basic earning power ratio increased. D. The companys equity multiplier increased. E. The companys debt ratio increased.

19. Amram Companys current ratio is 2.0. Considered alone, which of the following actions would LOWER the current ratio? A. Borrow using short-term notes payable and use the proceeds to reduce accruals. B. Borrow using short-term notes payable and use the proceeds to reduce long-term debt. C. Use cash to reduce accruals. D. Use cash to reduce short-term notes payable. E. Use cash to reduce accounts payable.

20. Brookman Inc's latest EPS was $2.75, its book value per share was $22.75, it had 280,000 shares outstanding, and its debt ratio was 44%. How much debt was outstanding? A. $4,704,700 B. $5,355,350 C. $5,205,200 D. $4,054,050 E. $5,005,000

21. Jordan Inc has the following balance sheet and income statement data:

Cash $14,000 Accounts payable $42,000 Receivables 70,000 Other current liabilities 28,000 Inventories 280,000 Total CL $70,000 Total CA $364,000 Long-term debt 140,000 Net fixed assets 126,000 Common equity 280,000 Total assets $490,000 Total liab. and equity $490,000 Sales $280,000 Net income 21,000

The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.10, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change? A. 28.16% B. 20.93% C. 24.28% D. 32.29% E. 25.83%

22. Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT? A. The monthly payments will decline over time. B. A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment. C. The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity. D. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%. E. Exactly 10% of the first monthly payment represents interest. 23. You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT? A. The present value of ORD must exceed the present value of DUE, but the future value of ORD may be less than the future value of DUE. B. The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD. C. The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE. D. The present value of DUE exceeds the present value of ORD, and the future value of DUE also exceeds the future value of ORD. E. If the going rate of interest decreases from 10% to 0%, the difference between the present value of ORD and the present value of DUE would remain constant.