1. What numerators are used in the computation of the following ratios?
Inventory turnover ratio Accounts receivable turnover ratio
a. Cost of Goods Sold Cost of Goods Sold
b. Net Credit Sales Cost of Goods Sold
c. Net Credit Sales Net Credit Sales
d. Cost of Goods Sold Net Credit Sales
2. Which of the following ratios is least useful in evaluating a company's ability to pay its current debts as they become due?
a. Acid-test ratio
b. Debt service coverage ratio
c. Debt-to-equity ratio
d. Current ratio
3. During 2015, the accounts receivable balance of Dickerson Corp. increased. Which of the following statements is true?
a. This increase is added to net income in the operating activities section of a statement of cash flows prepared under the indirect method.
b. This indicates that Dickerson sold more than it collected in cash during the period.
c. This increase is added to sales recognized on the income statement to determine the cash collections from customers during the period.
d. This increase is considered only when the operating activities section of a statement of cash flows is prepared under the indirect method.
4. The cash-to-cash operating cycle is the number of days' sales in:
a. inventory and receivables.
b. inventory and plant assets.
c. receivables and working capital.
d. receivables and plant assets.