1. Describe in three sentences or less the primary differences between the income statement and the balance sheet of a company.

2. You are a supplier of equipment and a customer asks for payment terms. They have a large order pending and want to pay you in 60 days. You conduct a financial statement review and you see that this customer has some cash on the balance sheet, (but less than the amount he is purchasing from you), he has a high balance of accounts receivable on the balance sheet, but they carry a very low inventory balance. You look at the Current Ratio, the Quick Ratio, the Fixed Asset Turnover Ratio and the Accounts Receivable Turnover Ratio. Of these ratios, what is the two most useful ratios and explain in 3-4 sentences why you would focus on these two ratios? Also, which is the least useful ratio of these four for this particular situation?

3. George's tire shop pays $10,000 a month in rent, $1,000 a month in utilities and $8,000 per month on administrative payroll. They sell one type of tire and it sells for $100 per tire. George's Tore shop pays its supplier $60 per tire. Property taxes for the year are $12,000. In order for George's Tire Shop to break even, they need to average how many tires sold every month over the next year?