QUESTION 1 Anyone analyzing a firm's financial statements should A. use audited financial statements. B. do a trend analysis. C. perform a benchmark analysis. D. All of the above. QUESTION 2 Which of the following is NOT true about the inventory turnover ratio? A. The more times a firm can turnover its inventory, the better o B. Too high a turnover or too low a turnover could be a warning sign. C. It measures how many times the inventory is turned over into saleable products. D. It is calculated by dividing inventory by cost of goods sold. QUESTION 3 Which one of the following statements is NOT true? 0 A. One ratio that measures the efficiency of a firm's collection policy is day's sales outstanding B. The more days that it takes a firm to collect on its receivables, the more efficient the firm is. C. The accounts receivables turnover ratio measures how quickly the firm collects its credit sales. 0 D. Day's sales outstanding measures in days, the time a firm takes to convert its receivables into cash. QUESTION 4 Which one of the following statements is NOT correct? o A. A leveraged firm is riskier than a firm that is not leveraged. OB. A leveraged firm is less risky than a firm that is not leveraged C. A firm that uses debt magnifies the return to its shareholders. D. All of the above statements are correct