1. A company's current ratio equals:
A. Current assets x current liabilities
B. Current liabilities/current assets
C. Current assets/current liabilities
D. Quick assets/quick liabilities
2. A measure of a corporation's profitability that is required to be reported as part of the income statement is:
A. Earnings per share
B. Cash flow per share
C. Times interest earned
D. Gross margin percentage
3. The total asset turnover ratio measures
A. How well a firm uses its assets to produce sales
B. The rate of return on a firm's investment in assets
C. The portion of assets that has been financed by investors
D. The portion of assets that has been financed by creditors
4. Which of the following would be most useful in deciding whether or not to purchase a firm's common stock?
A. Return on equity
B. Return on assets
C. Asset turnover
D. Current ratio
5. Which of the following would be least useful in assessing a firm's long-term debt-paying ability?
A. Long-term debt to equity
B. Times interest earned
C. Debt to equity
D. Current ratio