Q2: Multiple Choice Questions (select the right answer and justify it) 1. Liquidity ratios indicate the ability of the firm to: a. meet future short term financial obligations. b. meet future long term financial obligations. c. settle current debt with fixed assets. d. settle future short term debt with fixed assets. 2. Comparison of a companys financial results to other peer companies for the same time period is called: a. technical analysis. b. fundamental analysis. c. cross-sectional analysis. 3. In order to assess a companys ability to fulfill its long-term obligations, an analyst would most likely examine: a. activity ratios. b. liquidity ratios. c. debt ratios. 4. Which ratio would a company most likely use to measure its ability to meet short-term obligations? a. Current ratio. b. Payables turnover. c. Gross profit margin. 5. Which of the following ratios would be most useful in determining a companys ability to cover its lease and interest payments? a. ROA. b. Total asset turnover. c. Fixed charge coverage.