Reference no: EM133011433

Problem 1: The quick ratio is typically computed as

a. the liquidity ratio divided by the equity ratio.

b. current assets minus inventory divided by current liabilities minus accounts payable.

c. current assets minus inventory and prepaid items divided by current liabilities.

d. cash divided by accounts payable.

Problem 2: Working capital is equal to

a. current assets.

b. current liabilities.

c. current assets plus current liabilities.

d. current assets minus current liabilities.

Problem 3: Using borrowed funds to generate additional profits for shareholders is referred to as

a. liquidity management.

b. operational expansion.

c. capital budgeting.

d. financial leverage.

Problem 4: Rent collected in advance is

a. an asset account in the balance sheet.

b. a liability account in the balance sheet.

c. a shareholders' equity account in the balance sheet.

d. a temporary account; not in the balance sheet at all.