CH03TBV7 - CHAPTER 3 Working with Financial Statements I...

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CHAPTER 3 Working with Financial Statements I. DEFINITIONS SOURCES OF CASH a 1. Activities of the firm that generate cash are known as: a. sources of cash. b. uses of cash. c. cash payments. d. cash receipts. e. cash on hand. USES OF CASH b 2. Activities of the firm in which cash is spent are known as: a. sources of cash. b. uses of cash. c. cash payments. d. cash receipts. e. cash on hand. STATEMENT OF CASH FLOWS d 3. 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. COMMON-SIZE STATEMENTS e 4. 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 COMMON-BASE YEAR STATEMENTS c 5. A _____ standardizes items on the income statement and balance sheet relative to their values as of a common point in time. a. statement of standardization b. statement of cash flows c. common-base year statement d. common-size statement e. tax reconciliation statement
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FINANCIAL RATIOS a 6. Relationships determined from a firm’s financial information and used for comparison purposes are known as: a. financial ratios. b. comparison statements. c. dimensional analysis. d. scenario analysis. e. solvency analysis. SHORT-TERM SOLVENCY RATIOS c 7. Financial ratios that measure a firm’s ability to pay its bills over the short run without undue stress are known as _____ ratios. a. asset management b. long-term solvency c. short-term solvency d. profitability e. market value CURRENT RATIO b 8. 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. QUICK RATIO d 9. 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. CASH RATIO e 10. The cash ratio is measured as: a. current assets divided by current liabilities. b. current assets minus cash on hand, divided by current liabilities. c. current liabilities plus current assets, divided by cash on hand. d.
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This note was uploaded on 03/09/2010 for the course FINANCE FIN310 taught by Professor Xxx during the Spring '10 term at The School of the Art Institute of Chicago.

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CH03TBV7 - CHAPTER 3 Working with Financial Statements I...

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