Question Part 1 of 1 – 90.0/ 100.0 Points Question 1 of 20 5.0/ 5.0 Points Which of the statements below is FALSE? A. The income statement summarizes and categorizes a company’s revenues and expenses for that period. B. Typically, income statements are prepared quarterly and annually for distribution outside the company, but usually monthly for internal managers. C. The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes (EBIT.. D. The balance sheet reports the performance of the firm over the past period. It summarizes and categorizes a company’s revenues and expenses for that period. Question 2 of 20 5.0/ 5.0 Points A current ratio greater than one can tell us that the company __________. A. should be able to cover the current liabilities B. should be able to keep away from short-term cash problems C. may have too much capital tied up in current assets D. all of these Question 3 of 20 5.0/ 5.0 Points Computing liquidity ratios is ________ but interpreting them is ________. A. complex, even more complex B. complex, more straightforward C. straightforward, more complex D. none of these Question 4 of 20 5.0/ 5.0 Points The DuPont Model measures ROE by multiplying __________. A. the current ratio x total asset turnover x the equity multiplier B. the profitability ratio x times interest earned x the equity multiplier C. the profitability ratio x total asset turnover x the equity multiplier D. the current ratio x times interest earned x the equity multiplier Question 5 of 20 5.0/ 5.0 Points Which of the statements below is FALSE? A. The textbook uses the framework of the income statement to find the operating income of the company (an accounting measure. and then makes adjustments to find the true cash flow from operations. B. In accrual-based accounting, revenue is recorded at the time of sale if the revenue has been received in cash. C. Three fundamental issues separate net income and cash flow: accrual-based accounting, non-cash expense items, and interest expense. D. Generally Accepted Accounting Principles (GAAP. in the United States allow the use of accrual accounting to record revenue. Question 6 of 20 5.0/ 5.0 Points Orange Electronics Inc. has a profitability ratio of 0.14, an asset turnover ratio of 1.7, a debt to equity ratio of 0.60 and a total asset to equity ratio of 1.60. What is the firm’s ROE? A. 14.28% B. 22.85% C. 38.08% D. 41.76% Question 7 of 20 5.0/ 5.0 Points The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes. Next, interest expense is subtracted to find the taxable income for the period. Then the appropriate taxes are calculated and subtracted. We finally arrive at the __________, the so-called bottom line of the income statement. A. after-tax income B. before-tax income C. net income D. EBIT Question 8 of 20 0.0/ 5.0 Points Which of the statements below is FALSE? A. The purpose of studying financial statements is to understand those portions of the statements that have relevance for financial decision making. B. We need to understand how to interpret and use the information presented in financial statements to form a picture of the financial profile of the firm. C. Accounting, it has been said, looks back to where a company has been somewhat like looking through a rear view mirror. D. Accounting and finance view the numbers in the same way. Question 9 of 20 5.0/ 5.0 Points Because financial ratios can vary across industries, it is __________ these ratios by industry. A. not necessary to study B. unimportant to benchmark C. important to benchmark D. futile to examine Question 10 of 20 5.0/ 5.0 Points Which of the following are liquidity ratios? A. current ratio B. the quick ratio C. the cash ratio D. all of the above Question 11 of 20 0.0/ 5.0 Points Which of the following address the question of whether a company can meet its oblig…
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