1.

The financial statement showing a firms accounting value on a particular date is the:
a. income statement.
b. balance sheet.
c. statement of cash flows.
d. tax reconciliation statement.
e. shareholders equity sheet.

2. A firm has a debt-equity ratio of .40. What is the total debt ratio?
a. .29
b. .33
c. .67
d. 1.40
e. 1.50

3. Financial leverage refers to the:

a. amount of debt used in a firms capital structure.
b. ratio of retained earnings to shareholders equity.
c. ratio of paid-in surplus to shareholders equity.
d. ratio of cost-of-goods-sold to total sales.
e. amount of receivables present in the firms asset structure.

4. The financial statement summarizing a firms performance over a period of time is the:
a. income statement.
b. balance sheet.
c. statement of cash flows.
d. tax reconciliation statement.
e. shareholders equity sheet.

5. _____ refers to the firms interest payments less any net new borrowing.
a. Operating cash flow
b. Capital spending
c. Net working capital
d. Cash flow from assets
e. Cash flow to creditors

6. Ratios that measure a firms financial leverage are known as _____ ratios.
a. asset management
b. long-term solvency
c. short-term solvency
d. profitability
e. market value

7. A firm has sales of $1,200, net income of $200, net fixed assets of $500, and current
assets of $300. The firm has $100 in inventory. What is the common-size statement
value of inventory?
a. 8.3 percent
b. 12.5 percent
c. 20.0 percent
d. 33.3 percent
e. 50.0 percent
8. Jessicas Boutique has cash of $50, accounts receivable of $60, accounts payable of
$200, and inventory of $150. What is the value of the quick ratio?
a. .30
b. .55
c. .77
d. 1.30
e. 1.82

9. Ivans, Inc. paid $500 in dividends and $600 in interest this past year. Common stock
increased by $200 and retained earnings decreased by $100. What is the net income for
the year?
a. $400
b. $500
c. $600
d. $800
e. $1,000

10. Tims Playhouse paid $155 in dividends and $220 in interest expense. The addition to
retained earnings is $325 and net new equity is $50. The tax rate is 25 percent. Sales
are $1,600 and depreciation is $160. What are the earnings before interest and taxes?
a. $480
b. $640
c. $860
d. $1,020
e. $1,440