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Devry FIN 382 Week 3 Quiz

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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.

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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.