Question : 81. The current ratio equals A. current assets plus current liabilitiesB. current assets : 1230586

81. The current ratio equals  
A. current assets plus current liabilities
B. current assets minus current liabilities
C. current assets multiplied by current liabilities
D. current assets divided by current liabilities
E. current liabilities minus current assets

82. The current ratio indicates a firm’s ability to meet its short-term obligations. Analysts prefer a current ratio that at least exceeds  
A. .5
B. 1.0
C. 2.0
D. 3.0
E. 4.0

83. How can management take deliberate steps to produce a financial statement that presents a better current ratio at the balance sheet date than the average, or normal, current ratio during the rest of the year.  Analysts refer to such actions as window dressing.  
A. near the end of its accounting period a firm might delay normal purchases on account
B. hasten the collections of a loan receivable, classified as noncurrent assets, and use the proceeds to reduce current liabilities
C. near the end of its accounting period a firm might accelerate normal purchases on account
D. hasten the collections of a loan receivable, classified as current assets, and use the proceeds to reduce long-term liabilities
E. choices a and b

84. What ratio customarily includes in the numerator cash, marketable securities, and accounts receivable; and the denominator includes all current liabilities.  
A. current ratio
B. noncurrent ratio
C. acid test ratio
D. quick ratio
E. choices c and d

85. Healthy mature firms typically have a cash flow from operations to current liabilities ratio of  
A. 10% or more.
B. 20% or more.
C. 30% or more.
D. 40% or more.
E. 50% or more.

86. The accounts payable turnover ratio uses purchases on account in its computation.  Although firms do not disclose their purchases, the analyst can calculate the purchase amount as follows:  
A. Purchases = Cost of Goods Sold + Ending Inventory + Beginning Inventory
B. Purchases = Cost of Goods Sold + Ending Inventory – Beginning Inventory
C. Purchases = Cost of Goods Sold – Ending Inventory + Beginning Inventory
D. Purchases = Cost of Goods Sold – Ending Inventory – Beginning Inventory
E. Purchases = Cost of Goods Sold x Ending Inventory – Beginning Inventory

87. Analysts use measures of long-term _____  to evaluate a firm’s ability to meet interest and principal payments on long-term debt and similar obligations as they come due. If a firm cannot make the payments on time, it becomes insolvent and may have to reorganize or liquidate.  
A. insolvency factors
B. reorganization factors
C. liquidity risk
D. insolvency risk
E. cash flow risk

88. In assessing the debt ratios, analysts customarily vary the standard in relation to the stability of the firm’s earnings and cash flows from operations. Public utilities have liabilities to assets ratios frequently on the order of  
A. 0% to 10%.
B. 10% to 20%.
C. 30% to 40%.
D. 60% to 70%.
E. 90% to 100%.

89. In assessing the debt ratios, analysts customarily vary the standard in relation to the stability of the firm’s earnings and cash flows from operations. Banks have liabilities to assets ratios, typically  
A. over 10%.
B. over 30%.
C. over 50%.
D. over 70%.
E. over 90%.

90. A mature, financially healthy company typically has a cash flow from operations to total liabilities ratio of  
A. 5% or more.
B. 20% or more.
C. 45% or more.
D. 70% or more.
E. 90% or more.