Multiple choice questions (only need the answer)
1. Assuming that the stock market is efficient, which of the following statements is correct?
a. Investors can make money through investing in hot IPOs
b. skilled mutual fund managers can outperform the market by selecting undervalued stocks
c. investing in individual stocks is always more rewarding than in diversified portfolios
d. the best investment vehicle is market index funds
2. Liquidity ratios measure how efficiently the firm utilizies its assets to generate sales
a. true
b. false
3. Ryngard Corp's sales last year were $43,000, and its accounts receivable were $16,000. what was its days sales outstanding ratio (DSO)?
a. 45
b. 136
c. 273
d. 365
4. in WorldCom and Enron accounting scandal, they classified operating expenses as capital investments, affecting firms'
a. total assets
b. cash flows from operating activities
c. net income
d. profit margin
e. all of the above
5. ratio analysis is an important component of evaluating company performance. it can provide great insights into how a company matches up against itself over time and against other players within the industry. however, like many tools and techniques, ratio analysis has a few limitations and weaknesses.
Which of the following statements represent a weakness or limitation of ratio analysis?
I. Window dressing might be in effect.
II. Seasonal factors can distort data.
III. Market data is not sufficiently considered.
a. I
b. II
c. III
d. I and II
e. I, II, and III