Question

1. Citibank has extended short-term credit to Czerner Company. Citibank is most concerned with what financial characteristic of Czerner?

Group of answer choices

Liquidity

Profitability

Solvency

Efficiency

2. Czerner Company has obtained significant long-term debt financing in the form of loans from Manufacturers Hanover Bank. Manufacturers Hanover is most concerned with what financial characteristic of Czerner?

Group of answer choices

Solvency

Liquidity

Efficiency

Profitability

3. Company A and Company B both retail a product where there is no room for price competition - the selling price is the same for all retailers of this item. However Company A has innovative purchasing and is able to obtain the product from wholesalers at a lower cost than Company B. What financial ratio will most directly detect this difference?

Group of answer choices

Gross profit margin

Operating margin

Profit margin

Return on equity

4. Operating income is shown as an intermediate profit figure on the income statement. Why is interest expense excluded from the calculation of operating income

Group of answer choices

to make operating income independent of the firm's financial policy

interest is non-recurring

interest is not tax deductible

to make operating income consistent with earnings per share

Answer 1