Please see attached document for practice quiz questions.

1. QUESTION 1 Liquidity is nearer to a cash position, and more of it is always desired by the company, bondholders and shareholders alike. True False 1 points 1. QUESTION 2 One management paradox is that managers are rewarded in the shortrun for profitability when stockholders should be concerned over the longrun. True False 1 points 1. QUESTION 3 With the exception of an IPO, the firms value is set by the market through the laws of supply and demand. True False 1 points 1. QUESTION 4 One valuation technique should be used universally and consistently for all valuation decisions. True False 1 points 1. QUESTION 5 Trend analysis is most appropriate when looking over five years worth of data. True False 1 points QUESTION 6 1. Ratio analysis is useless unless compared to some other time period or company. True False 1 points QUESTION 7 1. Assets plus liabilities must equal stockholders equity on the balance sheet. True False 1 points QUESTION 8 1. The following shows the ratio analysis of Traction Software relative to the ABC Corporation. Evaluate the company relative to history and the other firm. Include an explanation of each ratio as part of your answer. Tell the company story as signaled by the ratios. Which company will bondholders be more attracted to? Stockholders? Which company is more risky? Calculate the per share price for each year and company (Hint: use the P/E and EPS) Which company would you invest in and why? Traction Software Ratio/Year Year Y Year Z ABC Company-Year Z Price to Earnings 13 15 20 Current 1.06 1.16 1.82 Inventory turnover 10.40 11.37 12.45 Quick .57 .63 1.10 Average collection period 29.6 days 35.3 days 20.2 days Total asset turnover 5.46 days 7.98 days 3.92 days Earnings per share .56 .47 1.05 Debt ratio .66 .53 .55 Times interest earned 4.8 6.3 5.6 Net profit margin 25% 13% 55% ROA NMF NMF 15.6% ROE NMF NMF 34.7% Beta .96 1.02 1.35 NMF= Not meaningful