Analysis of Financial Statements: Multiple Choice: Conceptual
Analysis of Financial Statements: Multiple Choice: Conceptual
Analysis of Financial Statements: Multiple Choice: Conceptual
Easy:
Current ratio Answer: a Diff: E
1. All else being equal, which of the following will increase a company’s
current ratio?
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Leverage and financial ratios Answer: d Diff: E
4. Stennett Corp.’s CFO has proposed that the company issue new debt and
use the proceeds to buy back common stock. Which of the following are
likely to occur if this proposal is adopted? (Assume that the proposal
would have no effect on the company’s operating income.)
a. A company that has positive net income must also have positive EVA.
b. If a company’s ROE is greater than its cost of equity, its EVA is
positive.
c. If a company increases its EVA, its ROE must also increase.
d. Statements a and b are correct.
e. All of the above statements are correct.
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