A.Which of the following is not true regarding financial analysis?

There is not one important ratio that will indicate the overall health of an organization.

There is one standard rule for calculating ratios that should always be followed.

There is not an acceptable range that ratios must fall into for a company to be healthy.

There is more to be learned about a business than can be learned from ratios.

b.

Old MacDonald had a farm. His primary products were eggs and milk. On this farm he had some chickens (primarily hens with one or two roosters) and some cows. Both the chickens and the cows were expected to produce for at least 3 years. In Macs accounting system, the chickens and cows were considered to be which of the following:

depreciable assets

prepaid expenses

inventory

none are correct

c.

Which of the following statements is FALSE regarding working capital and liquidity?

We want to maximize the amount of investment we have in inventory.

We want to minimize the amount of time we take to collect our receivables.

We want to maximize the time we take to pay back our accounts payable.

We want to minimize the amount of cash we need on hand for day-to-day operations.