31 all other things equal a higher current ratio indicates that a a company has exce 4307387

31 all other things equal a higher current ratio indicates that a a company has exce 4307387

31) All other things equal, a higher current ratio indicates that ________.

A) a company has excess cash to pay liabilities

B) a short-term creditor is likely to be paid in full and on time

C) a company's long-term debt is coming due within the next year

D) a company's short-term debt is coming due within the next year

32) In accordance with Generally Accepted Accounting Principles in the United States, the ________ must be reported on the financial statements.

A) price-earnings ratio

B) dividend payout ratio

C) earnings per share

D) dividend yield ratio

33) The operating return on total assets is equal to the ________ times the ________.

A) operating return on sales; price-earnings ratio

B) operating return on assets; dividend payout ratio

C) operating return on sales; total asset turnover

D) return on equity; debt-to-equity ratio

34) Line items on common-size financial statements are expressed in percentages of some base such as total assets.

35) The current ratio equals current assets divided by current liabilities.

36) Return on sales equals gross profit divided by sales.

37) Liquidity ratios focus on whether there are sufficient current assets to satisfy current liabilities as they come due.

38) The income statement for Manny Company for the year ended December 31, 2010 is given below:

Sales$1,486

Cost of goods sold872

Gross profit614

Operating expenses436

Operating income178

Income tax expense66

Net income$112

Required:

Prepare a common-size income statement.

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