Devry FIN 382 Week 3 Quiz
Question 1 (TCO 5) Which of the following best indicates that a firm carries excess inventory?
- A decline in sales
- A decline in the current ratio
- A decline in days’ sales in inventory
- A stable current ratio with declining quick ratios
- A rise in total asset turnover
Question 2 (TCO 5) A high working capital turnover ratio indicates
- that the firm is overcapitalized.
- an unprofitable use of working capital.
- that the firm is undercapitalized.
- None of the above
Question 3 (TCO 5) Investments classified as marketable securities should be
- temporary.
- long-term.
- permanent.
- None of the above
Question 4 (TCO 6) A low sales to working capital ratio tentatively indicates a(n)
- profitable use of working capital.
- unprofitable use of working capital.
- equal use of working capital.
- All of the above
Question 5 (TCO 6) When dong external analysis, many of the reasons why the day’s sales in receivables is abnormally high or low cannot be determined without access to
- external information.
- financial information.
- internal information.
- receivable information.
Question 6. (TCO 5) Working capital of a business is
- the excess of current liabilities over current assets.
- the excess of assets over liabilities.
- the excess of current assets over current liabilities.
- the excess of liabilities over assets.
Question 7. (TCO 5) A comparison of current assets with current liabilities gives an indication of
- long-term debt paying ability.
- overall debt paying ability.
- short-term debt paying ability.
- no debt paying ability.
Question 8.(TCO 5) Investments classified as marketable securities should be
- temporary.
- long-term.
- permanent.
- None of the above
Question 9.(TCO 6) If a firm has pledged its receivables and its inventory, then the best indicator of its short-term liquidity may be indicated by
Student Answer:
- working capital.
- an acid-test.
- cash ratio.
- day’s sales in receivables.
Question 10.(TCO 6) By reporting marketable equity securities under current assets, management picks up a(n)
Student Answer:
- asset advantage.
- debt advantage.
- liquidity advantage.
- investment advantage.