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5 Written questions

5 Matching questions

  1. tests of liquidity
  2. Internal benchmarking and external benchmarking
  3. Liquidity
  4. solvency
  5. prepaid expenses
  1. a arise from payments made for a good or service in an accounting period PRIOR to the one during which the good/service is actually used
  2. b 2 commonly used standards for interpreting financial ratios
  3. c measure the firm's ability to pay its current debt as it comes due (Current ratio, quick ratio,accounts payable period)
  4. d Can th efirm pay its shrot-term debts as they come due
  5. e can the firm pay its long-term debt on a continuing basis

5 Multiple choice questions

  1. what its called when cash is withdrawn from business (called dividends paid for corporations)
  2. those that will be sold, consumed, or converted to cash within the current operating cycle of business (1 year)
  3. when the owner borrows funds needed to run the business and uses less capital (risky): this gets high when there is too much debt and little owner investment, financial crisis occurs, and it's a new pharmacy
  4. Ratio measures how effectively all funds availableto the manager, both debt and equity, have been used. better indicator of manager's performance than ROE bc it considers all funds at teh manager's disposal, not just investements
  5. wht you give back to owners

5 True/False questions

  1. depreciation expensecosts that business incurs to make sales or earn revenue (salaries, rent, utilities)


  2. noncurrent/fixed assetsthose that under nromal conditions are not sold, consumed or converted to cash within cycle (year)


  3. statement of retained earningsprofits (or losses) that the business has made during its years of operation and that have been left in the business (profits increase this/losses decrease)


  4. current liabilitiesconsist of those debts that will come due during the current operating cycle of business (accounts payable, short term notes, accrued expenses, and current portion of long term debts)


  5. external benchmarkingratios of other pharmacies of the same type and with similar financial resources, many professional organizations provide financial info and ratios through periodic surveys of their membership (but problems arise when pharmacies differ in Rx volume, location, and accounting)


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