7) For a given level of profitability as measured by profit margin, the firm's return on equity will
A. decrease as its current ratio increases.
B. decrease as its times-interest-earned ratio decreases.
C. increase as its debt-to assets ratio increases.
D. increase as its debt-to-assets ratio decreases.

8) The most rigorous test of a firm's ability to pay its short-term obligations is its
A. quick ratio.
B. times-interest-earned ratio.
C. debt-to-assets ratio.
D. current ratio.

9) If a firm has both interest expense and lease payments,
A. times interest earned will be greater than fixed charge coverage.
B. fixed charge coverage cannot be computed.
C. times interest earned will be the same as fixed charge coverage.
D. times interest earned will be smaller than fixed charge coverage.

Optional Information:
Subject: ACCOUNTING