18.

The reasonableness and feasibility of short-term cash forecasts can be evaluated by preparing:

A.	bank reconciliation statements.

B.	pro forma financial statements.

C.	responsibility reports.

D.	interest coverage computations.

19 .

If a company is to successfully remain in business over the long haul, which of the following statements is most correct?

C.	Total cash flow from financing, measured over an extended period, should be negative.

D.	Total cash flow from financing plus total cash flow from investing, measured over an extended period, must be positive.

20.

When a company is experiencing rapid growth, which of the following statements is the most correct?

A.

B.

C.	Cash flow from operations will be high due to rapid growth allowing company to pay down debt.

D.	Rapid growth will increase internally generated funds allowing higher dividend payments in periods of rapid growth.

21.

Which of the following statements is incorrect?

A.	The quicker a company collects money from its customers the greater its liquidity, all else equal.

B.	The more quickly a company turns over its inventory, the greater its liquidity, all else equal.

C.	The lower a company's depreciation the greater its liquidity, all else equal.

D.	The greater a company's profit margin the greater its liquidity, all else equal.

22.

Which of the following statements is incorrect?

A.	It is possible for a profitable company to go out of business because of short-term liquidity problems.

B.	If a company has a current ratio greater than 1, it will never go out of business because of liquidity problems.

C.	The current ratio is always greater than or equal to the quick ratio.

D.	The accuracy of a cash flow forecast is inversely related to the forecast horizon.