2) The best description of a business which has increased its debt-to-asset ratio is one which has a. increased its debt relative to total assets b. purchased more assets c. increased its debt d. sold some assets 5) A business which is highly leveraged is one which has a. a large debt relative to net worth b. many current liabilities c. a large net farm income d. a high equity to asset ratio 6) Lenders may require a cash flow analysis to a. determine the profitability of the farm operation b. collect data to complete the net worth statement c. determine the machinery investment per acre d. evaluate loan repayment potential 8) Which of the following will not change the quick ratio? a. a credit sale from inventory b. transfer of cash to a savings account c. using cash to purchase equipment d. all of the above 9) The ratio that shows how much of farm income is used to pay for borrowed capital is a. operating-expense ratio b. income-expense ratio c. interest-expense ratio d. net farm income ratio 10) Which of the following farm financial ratios best measures the trend for the overall financial progress of a farm business operation? a. Leverage Ratio b. Equity to Asset Ratio c. Return on Investment Ratio d. Debt Servicing Ratio