Multiple choice

1) If a firm has both interest expense and lease payments, 

A) times interest earned will be smaller than fixed charge coverage. 

B) times interest earned will be greater than fixed charge coverage. 

C) times interest earned will be the same as fixed charge coverage. 

D) fixed charge coverage cannot be computed. 

2) You will deposit $2,000 today. It will grow for 6 years at 10% interest compounded semiannually. You will then withdraw the funds annually over the next 4 years. The annual interest rate is 8%. Your annual withdrawal will be: 

A) $2,340 

B)$4,332 

C) $797 

D) $1,085 

3) A firm has total assets of $2,000,000.  It has $900,000 in long-term debt.  The stockholders equity is $900,000.  What is the total debt to asset ratio? 

A) 45% 

B) 40% 

C) 55% 

D) 10% 

4) If accounts receivable stays the same, and credit sales go up

A) the average collection period will go up.

B) the average collection period will go down.

C) accounts receivable turnover will decrease.

D) there is no relationship between accounts receivable and credit sales