1.The ________ ratio measures the proportion of total assets financed by the firm's creditors.

1. 1. total asset turnover
2. 2. fixed asset turnover
3. 3. current
4. 4. debt

2.The ________ of a business firm is measured by its ability to satisfy its short-term obligations as they come due.

1. 1. activity
2. 2. debt
3. 3. profitability
4. 4. liquidity

3.A corporation had year end 2004 and 2005 retained earnings balances of $320,000 and $400,000, respectively. The firm reported net profits after taxes of $100,000 in 2005. The firm paid dividends in 2005 of ________.

1. 1. $100,000
2. 2. $20,000
3. 3. $80,000
4. 4. $0

4.The ________ measures the percentage of each sales dollar remaining after ALL expenses, including taxes, have been deducted.

1. 1. gross profit margin
2. 2. earnings available to common shareholders
3. 3. operating profit margin
4. 4. net profit margin

5.Ratios provide a ________ measure of a company's performance and condition.

1. 1. gross
2. 2. definitive
3. 3. relative
4. 4. qualitative

6.The higher the value of ________ ratio, the better able the firm is to fulfill its interest obligations.

1. 1. average payment period
2. 2. times interest earned
3. 3. debt
4. 4. average collection period

7.Which of the following is a source of cash flows?

1. 1. Cost of goods sold.
2. 2. Depreciation.
3. 3. Taxes.
4. 4. Interest expense.