26. An increasing average collection period indicates A. the firm is generating more income. B. accounts receivable are going down. C. the company is becoming more efficient in its collection policy. D. the company is becoming less efficient in its collection policy.

28. Disinflation may cause A. an increase in the value of gold, silver, and gems. B. a reduced required return demanded by investors on financial assets. C. additional profits through falling inventory costs. D. None of these.

30. The most rigorous test of a firm's ability to pay its short-term obligations is its A. current ratio. B. Acid test ratio C. debt-to-assets ratio. D. times-interest-earned ratio.

31. In developing the pro forma income statement we follow four important steps: 1) compute other expenses, 2) determine a production schedule, 3) establish a sales projection, 4) determine profit by completing the actual pro forma statement.

32. Pro forma financial statements are A. the most comprehensive means of financial forecasting. B. often required by prospective creditors. C. projections of financial statements for a future period. - D. all of these.