An annual report typically contains all of the following EXCEPT

a. Highlights of financial results

b. Letter from management

c. Statement of Income d. Letter from Credit Agency

11. Each of the following is a form of Liquidity Ratio EXCEPT

a. Current Ratio

b. Quick Ratio c. Return on Equity c. Average Payment Period

12. Caution should be exercised when comparing ratios for a company to the industry averages because

a. Some firm operate in more than one business b. Some firms operate globally while others operate in one country

c. Extremely high or low figures can distort an average d. All of the above

13. Credit analysis of customers includes a. Conditions: current economic climate b. Collateral: whether assets are available to provide security

c. Character: the ethical quality of the customer d. All of the above

14. Which of the following is the LEAST preferable form of Capital Budgeting?

a. Net Present Value

b. Payback Period c. Internal Rate of Return d. Profitability Index

15. Which of the following measures the dollar change in shareholder wealth from undertaking a project?

a. Net Present Value (NPV) b. Internal Rate of Return (IRR)

c. Profitability Index (PI) d. None of the above

16. The following should be EXCLUDED when calculating project cash flows a. Financing Costs related to this specific project b. Opportunity Costs of cash flows to already owned assets used in this project

c. Incremental after-tax cash flows from this specific project d. Cannibalization of cash flows from other lines of business

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17. Sunk Costs are a. Project-related expense that doesnt depend on whether the project is undertaken

b. Another term for Opportunity Costs c. Expenses that are actual paid rather than expenses that are accrued d. Project-related expenses once Accounts Payable are paid

18. Working Capital consists of a. Cash, Marketable Securities, Accounts Receivable, and Inventories

b. Property, Plant, and Equipment c.Bothaandb d. Neither a nor b

19. If a firms Accounts Collection Period is increasing, which of the following must be true

a. It is taking longer on average to collect payments b. Average Payment Period also is increasing c. Net Sales is increasing

d. Accounts Receivable is increasing

20. Which of the following can be a source of short-term financing to firms?

a. Treasury bills b. Bank line of credit

c. Equity sales d. Accounts receivable