1.Why type of ratios measure the firm's ability to meet cash needs as they arise?

A. Activity ratios

B. Liquidity ratios

C. Leverage ratios

D. Profitability ratios

2.What type of ratios measure the liquidity of specific assets and the efficiency of managing those assets?

A. Activity ratios

B. Liquidity ratios

C. Leverage ratios

D. Profitability ratios

3.What type of ratios measure the extent of a firm's financing with debt relative to equity and its ability to cover interest and fixed charges?

A. Activity ratios

B.Liquidity ratios

C.Market ratios

D.Leverage ratios

Use the following data to answer questions 4 - 7:

Selected Financial Data

Current assets$85,000

Current liabilities70,000

Accounts receivable35,000

Inventories40,000

Accounts payable25,000

NetSales425,000

Cost of Goods Sold258,000

4.The Current Ratio is:

A.2.1 to 1

B.0.1 to 1

C.0.8 to 1

D.1.2 to 1

5.The Quick Ratio is:

A.0.88 to 1

B.0.64 to 1

C.1.2 to 1

D.0.71 to 1

6.The average collection period is

A. 30 days

B. 24 days

C. 12 days

D. 4 days

7.The inventory held is

A.34 times

B. 9 times

C. 57 times

D. 18 times

Use the following data to answer questions 8 - 10

Selected Financial Data:

Net sales$500,000

Cost of Goods Sold300,000

Operatingexpenses100,000

Net Income30,000

Total assets180,000

Total liabilities120,000

Cash flow from

operating activities 10,000

8.The Debt Ratio is

1. A.8%
2. B.60%
3. C.67%
4. D.150%

9.The operating profit margin is

1. A.33%
2. B.20%
3. C.40%
4. D.55%

10.Return on equity is

1. A.25%
2. B.40%
3. C.50%
4. D.33%