Choose the letter a, b, c, or d that carries the best response.

1. The income statement reports the results of operations during the past year, the most important item being:

a.Net Income

b.Interest Expense

c.Earnings Before Interest and Taxes

d.Earnings Per Share

2. Which would represent claims against assets in the balance sheet:

a.Liabilities

b.Liabilities and stockholders' equity

c.Common stockholders' equity

d.Both common and preferred stockholders' equity

3. The two accounts that normally make up the common equity section of the balance sheet are and

a.accounts payable; accruals

b.common stock; retained earnings

c.long-term bonds; common stock

d.equity; liabilities

4. Accounting profits is different from net cash flow because

a.Net cash flow includes profits from operations.

b.Non-cash items are not included in the accounting profits

c.Net-cash flows take account of all non-cash items

d.Accounting profits overlooks depreciation and taxes

5. Which of the following represents an investing cash outflow?

a.An increase in holdings of stocks of other companies

b.A decrease in accounts payable

c.A decrease in gross property, plant and equipment

d.A decrease in accumulated depreciation

6. Which group of ratios shows the combined effect of liquidity, asset management and debt on operating results?

a.Liquidity ratios

b.Debt ratios

c.Coverage ratios

d.Profitability ratios

7. Cottler Ltd. has current. assets equal to $4.5 million. The company's current ratio is 1.25, and its quick ratio is 0.75. What is the firm's level of current liabilities in millions
	a.$3.6
	b.$0.18
	c.$2.4
	d.$2.9

8. You are given the following cash flows. What is the present value (t = 0) if the discount rate is 12 percent?

Time	0	1	2	3	4	5	6
Cash flows	0	1,000	2,000	2,000	2,000	0	-2,000

	PV= ?
	a.$3,277
	b.$4,169
	c.$5,302
	d.$4,289

9. You invest $5,000 today. You will earn 8% interest. How much will you have in 4 years? (Pick the closest answer.)

	a.$6,802
	b.$6,843
	c.$3,675
	d.$3,475

10. You are buying your first house for $220,000 and are paying $30,000 as a down payment. You have arranged a 30-year mortgage loan With a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?

	a.$1,513
	b.$1,464
	c.$1,264
	d.$6,922