1. The relationship between total liabilities and total assets motivates which of the following ratios?
a. Debt ratio
b. Current ratio
c. Inventory turnover
d. EBIT
2. Which of the following financial statements would answer the question, “What did the company decide to use its profit for?”
a. Income statement
b. Statement of retained earnings
c. Statement of cash flows
d. Balance Sheet
3. You borrow $20,000 to purchase a small cottage. If your loan rate is 8.5% interest per year and you are paying it monthly over 60 months. What is your monthly loan payment?
a. $410.33
b. $626.25
c. $333.33
d. $520.43
3. Your housing expense ratio, the percentage of your monthly income that you can use for all your house expenses, must be less than which of the following percentages in order to qualify for a mortgage? (Give the limit that cannot be exceeded in order to qualify.)
a. 15%
b. 22%
c. 28%
d. 36%
4. Which of the following is not typically included in a house payment?
a. Interest
b. Property taxes
c. Insurance
d. Realtor commission