How does the investment analyst's focus differ from the credit analyst's focus?

		The investment analyst focuses on the borrowing cause, the firm's capital structure and the source of debt repayment, while the creditor focuses on performance record and future expectations.
		The investment analyst focuses on capital structure, while the creditor focuses on strengths and weaknesses of the firm.
		The investment analyst focuses on the ability of the firm to make interest and principal payments, while the creditor focuses on estimating a company's future earnings.
		The investment analyst focuses on the firm's performance record, future expectations, the firm's competitive position, risk and expected returns, while the creditor focuses on the borrowing cause, the firm's capital structure and the source of debt repayment.

3 points

QUESTION 2

Which of the following statements is true?

		When analyzing financial ratios each situation should be evaluated within the context of the particular firm, industry, and economic environment.
		A definitive list of "rules of thumb" has been created for analysts to use when interpreting ratios.
		A uniform definition of each ratio exists to help analysts.
		Financial ratios are used to predict future events.

3 points

QUESTION 3

Liquidity ratios measure:

		the liquidity of specific liabilities and the efficiency of managing debt.
		the liquidity of specific assets and the efficiency of managing assets.
		a firm's ability to meet cash needs as they arise.
		the ability to cover debt and fixed interest and lease payments.