- (Topic 1)
A corporation shows the following on its financial statements (in millions).

The corporation has a financial leverage ratio of

1. A. 0.06
2. B. 0.50
3. C. 2.00
4. D. 3.60

Correct Answer: B

- (Topic 1)
Radal inc. currently has three product lines: stationery computer supplies, and printer cartridges Based on the following information, the company is considering whether to drop the printer cartridge line.

1. A. continue the printer cartridge product line to avoid an additional $3.000 decrease in net income
2. B. drop the printer cartridge product line as this will result in a $3 000 increase m net income
3. C. drop the printer cartridge product line as this will result in a $6,000 increase m net income
4. D. continue the printer cartridge product line to avoid an additional $6.000 decrease in net income

Correct Answer: A

- (Topic 1)
Marlow Company s partial balance sheet indicated the following.

1. A. 2.08
2. B. 1.96
3. C. 1.58
4. D. 0.51

Correct Answer: C

- (Topic 1)
SSA inc. issues 4% bonds with a lace value of $500,000 when the market rate of interest is 3% for similar bonds. The bonds mature in 10 years, and pay interest every six months. Which one of the following is closest to the amount of cash SSA will receive upon issued.

1. A. $459,000
2. B. $500,000
3. C. $505,000
4. D. $543,000

Correct Answer: D

- (Topic 1)
Abex Employment Agency has requested an increase in the firm's line of credit, and the bank is reviewing Abex's sales and collections history Although the firm's sales have increased the bank is concerned about the credit quality of the firm's customers Based on the following information calculate the average collection period for the firm Use a 365-day year in your calculations.

1. A. 80 days
2. B. 88 days
3. C. 99 days
4. D. 101 days

Correct Answer: A