ACCO Which of the following the describes the current ratio It and Question One smacks MCO 1 AI debration 0} operating performance rate quidity ratio D efficiency rate 2 Using rather than to time of ting price I lower the current ratio Increases inventory turnove increases profit margin IV. Increases debt/equity A) BP land o I and I Di Tonly --3 Which of the following does not represent future expected cash inflows? A) accounts receivable BI prepaid expenses inventory D) notes receivable Two companies, A and both have simillion in assets, net income before interest and taxes (EBIT) of $160.000, and the same tax rate. Company A is all equity financed and is 50% debt financed and Sox equity financed. It's pre-tax cost of debt is 8%, then Company A will have a ROA and a ROE that, compared to B's, are: lova, A) A'S ROA: higher, A'S ROL: same 8) A'S ROA: higher; A'S ROE: higher A'S ROA: same; A's ROE: same D) A'S ROA: same: A's ROE: lower Show your calculations to earn the marks of this question Ah............. 1. 2 B part ................ laan asiet et 5. Financial statement ratios support informed judgments and decision making most effectively: A) When viewed for a single year. B) When viewed as a trend of entity data. C) When compared to an industry average for the most recent year. D) When the trend of entity data is compared to the trend of industry data. 6. Simplifying assumptions made when using cost behavior pattern data include: A) relevant range and liquidity. B) fixed activity and linearity. C) relevant range and linearity. D) activity range and variability 7. When a corporation has both common stock and preferred stock outstanding: A dividends on preferred stock are paid only if the company has current earnings. B dividends on preferred stock must be paid before dividends on common stock can be paid. C. preferred stockholders receive the same dividend per share as common stockholders. D. dividends on preferred stock are paid only if dividends are to be paid on the common stock. 2