Chapter19TestBank-StaticStudent:___________________________________________________________________________MultipleChoiceQuestions1.Afirmhasahigherquick(oracidtest)ratiothantheindustryaverage,whichimpliesA.thefirmhasahigherP/Eratiothanotherfirmsintheindustry.B.thefirmismorelikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry.C.thefirmmaybelessprofitablethanotherfirmsintheindustry.D.thefirmhasahigherP/Eratiothanotherfirmsintheindustry,andthefirmismorelikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry.E.thefirmismorelikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry,andthefirmmaybelessprofitablethanotherfirmsintheindustry.2.Afirmhasalowerquick(oracidtest)ratiothantheindustryaverage,whichimpliesA.thefirmhasalowerP/Eratiothanotherfirmsintheindustry.B.thefirmislesslikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry.C.thefirmmaybemoreprofitablethanotherfirmsintheindustry.D.thefirmhasalowerP/Eratiothanotherfirmsintheindustry,andthefirmislesslikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry.E.thefirmislesslikelytoavoidinsolvencyintheshortrunthanotherfirmsintheindustry,andthefirmmaybemoreprofitablethanotherfirmsintheindustry.3.AnexampleofaliquidityratioisA.fixedassetturnover.B.currentratio.C.acidtestorquickratio.D.fixedassetturnoverandacidtestorquickratio.E.currentratioandacidtestorquickratio.4.__________providesasnapshotofthefinancialconditionofthefirmataparticulartime.A.ThebalancesheetB.TheincomestatementC.ThestatementofcashflowsD.Alloftheoptionsarecorrect.E.Noneoftheoptionsarecorrect.5.__________isareportofthecashflowgeneratedbythefirm'soperations,investments,andfinancialactivities.A.ThebalancesheetB.TheincomestatementC.ThestatementofcashflowsD.Theauditor'sstatementoffinancialconditionE.Noneoftheoptionsarecorrect.6.Afirmhasahigherassetturnoverratiothantheindustryaverage,whichimpliesA.thefirmhasahigherP/Eratiothanotherfirmsintheindustry.B.thefirmismorelikelytoavoidinsolvencyintheshortrunthanotherfirmsinthein...
