1. Which one of the following ratio sets analyze the efficiency of the company’s activity management?
A. Total debt to total assets and total debt to total equity.
B. current ratio and quick ratio.
C. Receivables turnover and inventory turnover or
D. Return on sales and return on equity ?
2. Assume a firm changes its method of depreciating fixed assets from straight line to an accelerated method such as MACRS and so depreciation expense increases over what would have been using the straight line method. What financial statements and accounts are affected and how? Choose all that apply from the list below.
1) Net income will decrease on the income statement
2) Operating cash flow will increase on the Cash Flow Statement
3) Net fixed assets will be reduced relative to using straight line depreciation
4) Accumulated depreciation will decrease
5) Retained earnings will decrease