1. In reviewing firm liquidity situations, lenders often count on the Quick Ratio (or Acid-Test ratio). Why is this ratio important if the firm has an adequate Current Ratio?
2. Which of the following ratios is most important when reviewing a firms financial health from its day-to-day operations Gross margin, Operating margin, and Net profit margin?
3. (a) A firm has an Equity Multiplier (EM) equal to 6.67. What is the firms Debt Ratio (DR)? (b) If the industry average DR is 0.79, is this firms debt situation Better, Worse, or Uncertain compared to the industry as a whole?