QUESTION 1

1. If a firm shows a profit on the quarterly income statement, then _____.

   	a.	there will be no need for additional financing
   	b.	the firm may need additional financing
   	c.	the firm will increase its cash balance
   	d.	All of these may be correct

0.5 points

QUESTION 2

1. The rate of return on fixed assets is normally assumed to be ____ the rate of return on current assets (especially cash and marketable securities).

   	a.	less than
   	b.	greater than
   	c.	equal to
   	d.	half

0.5 points

QUESTION 3

1. Basically, the overall working capital policy decision involves a ____ of alternative policies.

   	a.	profitability-risk trade-off
   	b.	financial choice
   	c.	risk decision
   	d.	None of these are correct

0.5 points

QUESTION 4

1. A firm's cash conversion cycle is equal to its operating cycle minus its ____.

   	a.	inventory conversion period
   	b.	receivables conversion period
   	c.	payables deferral period
   	d.	None of these are correct