Liquidity and Solvency Ratios: Free CMA Deep Dive + Sample Questions

This month’s free video lecture from Wiley CMAexcel is the right hook component of our one-two punch on Liquidity and Solvency Ratios (check out last month’s lecture).

This time, we’re jumping right into some sample multiple-choice questions that will be similar to ones you’re certain to see on the CMA Exam.

Dallon Christensen, CMA, CPA/CIPTA, walks us through three example questions and shows how to quickly breakdown the problem and find the right solution. You’re guaranteed to see several questions in this format and style on the CMA exam.

Without further ado …

Sample Multiple-Choice Questions

Here are a few practice questions that are similar to ones you’re likely to encounter on the CMA Exam. The answers are further down, but don’t cheat.

1) When a fixed asset is sold for less than book value, which one of the following will decrease?

A. Current ratio
B. Total current assets
C. Net working capital
D. Net profit

2) Shown below are beginning and ending balances for certain of Grimaldi Inc.’s accounts.

Grimaldi’s acid test or quick ratio at the end of the year is:

A. 1.15
B. 1.52
C. 0.83
D. 1.o2

3. Last year, Johnson Company’s days sales outstanding was 73 days. This year, days sales outstanding is 91.25 days. Over the same time period, sales have declined by 20%. In this period of time, what has happened to the level of Johnson Company’s accounts receivable?

A. Accounts receivables have increased.
B. There is not enough information provided to make a determination.
C. Accounts receivable have decreased.
D. There has been no change in accounts receivable.

The Answers

1. D

2. B

3. D

How’d you do?