Chapter 2--Analysis of Fina - Copy

Yesterday bicksler corporation purchased and received

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61. Yesterday, Bicksler Corporation purchased (and received) raw materials on credit from its supplier. All else equal, if Bicksler's current ratio was 2.0 before the purchase, what effect did this transaction have on Bicksler's current ratio? A. increased B. decreased C. stayed the same D. There is not enough information to answer this question. E. None of the above is a correct answer.
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62. Bubbles Soap Corporation has a quick ratio of 1.0 and a current ratio of 2.0 implying that 63. Which of the following statements is most correct? 64. All other things constant, an increase in a firm's profit margin would 65. Which of the following statements is correct? A. If Company A has a higher debt ratio that Company B, then we can be sure that A will have a lower times- interest-earned ratio than B. B. Suppose two companies have identical operations in terms of sales, cost of goods sold, interest rate on debt, and assets. However, Company A used more debt than Company B; that is, Company A has a higher debt ratio. Under these conditions, we would expect B's profit margin to be higher than A's. C. The ROE of any company which is earning positive profits and which has a positive net worth (or common equity) must exceed the company's ROA. D. Statements a, b, and c are all true. E. Statements a, b, and c are all false. 66. Pepsi Corporation's current ratio is 0.5, while Coke Company's current ratio is 1.5. Both firms want to "window dress" their coming end-of-year financial statements. As part of their window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions?
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