TRUE/FALSE

1. Simply calculating the various ratios tells everything you need to know about a company.
2. You would expect a produce market to have a low inventory turnover ratio.
3. The Acid Test Ratio uses only the most liquid current assets in its calculation.
4. The Current Ratio uses only the most liquid current assets in its calculation.
5. The Inventory Turnover Ratio indicates the number of times Accounts Receivable are turned into cash during the period.
6. The Return on Sales Ratio indicates how much income a company earns on each dollar of sales.
7. Debt management ratios measure how well a company is using debt versus its equity position.
8. The Average Collection Period indicates the number of days that it takes a business to collect its accounts receivable.
9. The Inventory Turnover Ratio indicates the number of times a company sells or turns over its average amount of inventory per year.

MULTIPLE CHOICE

1. Which type of ratio is NOT used in calculating financial ratios?

1. Liquidity Ratios
2. Trigonometric Ratios.
3. Asset Management Ratios.
4. Debt Management Ratios.
5. Profitability Ratios.

2. Quick assets are

1. Assets that can be easily be turned into cash.
2. Assets that are pledged to creditors.
3. Assets that are reserved for making interest payments.
4. Assets that increase in value over time.
5. Assets that are depreciable.