Question: From the financial statements given below, calculate the current ratio.

Answer: 1.44

(Current Assets/Current Liabilities = $1,070/$745)

Question: Analyzing financial statements to help appraise a firm’s financial position and strength is called “ratio analysis.”

Answer: True

Question:

Answer: 7.20%

(Return on Equity/Equity Multiplier = (12%/1.6667)

Question: From the financial statements given below, calculate the total debt to total capital and times-interest-earned ratios.

Answer: 0.433; 5.00

Question: Which of the following statements about ratio analysis is CORRECT?

Answer: Borrowing on a long-term basis and using the proceeds to retire short-term debt would improve the current ratio and thus could be considered to be an example of “window dressing.”