Reference no: EM132753893

Problem 1: The Colorado Jet Boat Company had a cash balance of $3 million at the beginning of 2010. During 2010, Sales were $8 million and expenses were $7 million. Therefore

Select one:

a. the cash balance at the end of 2010 is $4 million.
b. the cash balance at the end of 2010 must be greater than $3 million.
c. the cash balance at the end of 2010 must be less than $11 million.
d. the cash balance at the end of 2010 cannot be determined from the information given.

Problem 2: An analyst is evaluating two companies, A and B. Company A has a debt ratio of 50% and Company B has a debt ratio of 25%. In his report, the analyst is concerned about Company B's debt level, but not about Company A's debt level. Which of the following would best explain this position?

Select one:

a. Company B has much higher operating income than Company A.
b. Company A has a lower times interest earned ratio and thus the analyst is not worried about the amount of debt.
c. Company B has a higher operating return on assets than Company A, but Company A has a higher return on equity than Company B.
d. Company B has more total assets than Company A.