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5 Written questions

5 Matching questions

  1. Long-term liabilities
  2. Inventory
  3. Profitability
  4. Constant ratio method of forecasting
  5. Pro forma balance sheet
  1. a merchandise, raw materials, and products waiting to be sold.
  2. b include notes or loans that are repayable beyond one year, including liabilities associated with purchasing real estate, buildings, and equipment.
  3. c the ability to earn a profit.
  4. d if a firm uses percent-of-sales method, then the net result that each expense item (except depreciation) on its income statement will grow at the same rate as sales.
  5. e provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.

5 Multiple choice questions

  1. include marketing, administrative costs, and other expenses not directly related to producing a product or service.
  2. include obligations that are payable within a year, including accounts payable, accrued expenses, and the current portion of long-term debt.
  3. reflect past performance and are usually prepared on a quarterly and annual basis.
  4. a simple ratio that measures the price of a company's stock against its earnings.
  5. money owed to it by its customers.

5 True/False questions

  1. Financial ratiosdepict relationships between items on a firm's financial statements, used to discern whether a firm is meeting its financial objectives and how it stacks up against its industry peers.


  2. Stabilitythe ability to earn a profit.


  3. Debt-to-equity ratiocalculated by dividing its long-term debt by its shareholders' equity, if it gets too high, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth.


  4. Current assetsassets used over a longer time frame, such as real estate, buildings, equipment, and furniture.


  5. Other assetsassets used over a longer time frame, such as real estate, buildings, equipment, and furniture.


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