You wish to know how well a company is managing its accounts receivable and inventory. You will be looking at

	a.	Liquidity ratios
	b.	Leverage ratios
	c.	Activity or asset management ratios (these terms are used interchangeably)
	d.	Profitability ratios

A company's ability to pay its loans would be captured in the _____ ratio

	a.	Debt
	b.	Times interest earned
	c.	Debt to equity
	d.	Acid test

A company has the following ratios:
	2012	2013	2014
Current ratio	2.4	2.3	2.1
Debt ratio	0.6	0.5	0.3
Cash coverage	5.6	7.2	8.1
Inventory turns	3.2	3.6	3.9

What is true of this company?

	a.	Becoming more liquid evidenced by its cash coverage
	b.	Increasing its investment in inventory
	c.	Improving its ability to borrow
	d.	Becoming less liquid as evidenced by its debt ratio

Apex Company reports:

Depreciation 50

COGS 700

Sales 1,000

SG&A 100

Its peer group has a gross profit margin of 25%. How does Apex compare to its peers?

	a.	Apex 15% gross profit margin is inferior to its peer group
	b.	Apex 20% gross profit margin is inferior to its peer group
	c.	Apex 30% gross profit margin is superior to its peer group
	d.	Apex 25% gross profit margin is the same as its peer group--no better or worse

A company reports the following:

A company has the following ratios:
	2012	2013	2014
Current ratio	2.4	2.3	2.1
Debt ratio	0.6	0.5	0.3
Cash coverage	5.6	7.2	8.1
Inventory turns	3.2	3.6	3.9

Which of the following is a correct statement?

	a.	The company is becoming less liquid as evidenced by the cash coverage ratio
	b.	The company is reducing its investment in accounts receivable
	c.	The owners are financing an increasing percentage of assets
	d.	The company is carrying more inventory than in previous years