To gain insight into what portion of the company’s assets is liquid, an analyst will

If an analyst is preparing common-size financial statements the most appropriate way

of expressing the interest expense is as a percentage of:

A.sales.

B.total liabilities.

C.total interest-bearing debt.

An analyst gathers the following information about a company:

Cost of goods sold $18.4 million

Average inventory $2.5 million

Receivables turnover 24 times

Number of days of payables 25 days

Under U.S.GAAP, the company’s cash conversion cycle (in days) is closest to:

A.40.

B.59.

C.65.

In the evaluation of credit ratings, a company will most likely be assigned a higher credit rating if it has a:

A.lower EBITDA/Interest ratio.

B.lower dividends-to-total-debt ratio.

C.higher five year average of its coefficient of variation of its operating margin.

The use of financial ratio analysis is most likelylimited in which of the following situations? When:

A.providing a means of evaluating management’s ability.

B.comparing companies using different accounting methods.

C.providing insights into microeconomic relationships within a company that help analysts project earnings and free cash flow.