Chapter 3 SOLUTIONS

Chapter 3 SOLUTIONS - Chapter 3: Working with Financial...

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Chapter 3: Working with Financial Statements KEY Created: 8:38:08 PM EDT 1. The financial statement that summarizes the sources and uses of cash over a specified period of time is the: a. income statement. b. balance sheet. c. tax reconciliation statement. D statement of cash flows. e. statement of operating position. 2. A _____ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. a. tax reconciliation statement b. statement of standardization c. statement of cash flows d. common-base year statement E common-size statement 3. The current ratio is measured as: a. current assets minus current liabilities. B current assets divided by current liabilities. c. current liabilities minus inventory, divided by current assets. d. cash on hand divided by current liabilities. e. current liabilities divided by current assets. 4. The quick ratio is measured as: a. current assets divided by current liabilities. b. cash on hand plus current liabilities, divided by current assets. c. current liabilities divided by current assets, plus inventory. D current assets minus inventory, divided by current liabilities. e. current assets minus inventory minus current liabilities. 5. The debt-equity ratio is measured as total: a. equity minus total debt. b. equity divided by total debt. C debt divided by total equity. d. debt plus total equity. e. debt minus total assets, divided by total equity. 6. The equity multiplier ratio is measured as total: a. equity divided by total assets. b. equity plus total debt. c. assets minus total equity, divided by total assets. d. assets plus total equity, divided by total debt.
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E assets divided by total equity. 7. The total long-term debt and equity of the firm is frequently called: a. total assets. B total capitalization. c. total financing. d. debt-equity consolidation. e. debt-equity reconciliation. 8. The financial ratio measured as earnings before interest and taxes, divided by interest expense is the: a. cash coverage ratio. b. debt-equity ratio. C times interest earned ratio. d. gross margin. e. total debt ratio. 9. The financial ratio measured as earnings before interest and taxes, plus depreciation, divided by interest expense, is the: A cash coverage ratio. b. debt-equity ratio. c. times interest earned ratio. d. gross margin. e. total debt ratio. 10. Ratios that measure how efficiently a firm uses its assets to generate sales are known as _____ ratios. A asset management b. long-term solvency c. short-term solvency d. profitability e. market value 11. The inventory turnover ratio is measured as: a. total sales minus inventory. b.
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Chapter 3 SOLUTIONS - Chapter 3: Working with Financial...

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