LSUS MBA 701 EXAM 2 2026 – COMPLETE TEST BANK WITH 200+ REAL QUESTIONS & DETAILED RATIONALES

LSUS MBA 701 EXAM 2 NEWEST 2026 ACTUAL EXAM|
LSUS MBA 701 EXAM 2 REVIEW WITH COMPLETE REAL
EXAM QUESTIONS AND CORRECT VERIFIED ANSWERS/
ALREADY GRADED A+ (MOST RECENT!!)
1. A company’s current ratio is 2.5. Which action
would increase the current ratio?

 A) Buy inventory with cash

 B) Pay off accounts payable with cash

 C) Collect accounts receivable

 D) Issue short-term debt for cash

Correct Answer: B
Rationale: Paying AP reduces current liabilities more than current
assets (cash decreases, but AP decreases dollar for dollar). The
ratio increases if numerator decreases less than denominator.



2. If a firm has net income of 500, 𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛𝑜𝑓100,
increase in AR of 50, 𝑖𝑛𝑐𝑟𝑒𝑎𝑠𝑒𝑖𝑛𝐴𝑃𝑜𝑓30, and a decrease in
inventory of $20, what is cash flow from operations?

 A) $500
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,  B) $600

 C) $580

 D) $560

Correct Answer: B
*Rationale: Net income + depreciation − ΔAR + ΔAP +
Δinventory = 500 + 100 − 50 + 30 + 20 = 600.*



3. A high debt-to-equity ratio signals:

 A) Low financial risk

 B) High liquidity

 C) High financial leverage

 D) High profitability

Correct Answer: C
Rationale: D/E measures leverage; higher means more debt relative
to equity → higher financial risk and fixed obligations.



4. Which ratio best measures a firm’s ability to cover interest
payments?

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,  A) Current ratio

 B) Quick ratio

 C) Times interest earned

 D) Inventory turnover

Correct Answer: C
Rationale: TIE = EBIT / Interest expense, directly measures
coverage of interest obligations.



5. What is the effect of a stock split on ROE?

 A) Increases

 B) Decreases

 C) No change

 D) Depends on split ratio

Correct Answer: C
Rationale: Stock split changes share count and price but not net
income or total equity.




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, 6. If a company has a P/E ratio of 20 and earnings per share
of $3, what is the stock price?

 A) $6.67

 B) $20

 C) $60

 D) $3

Correct Answer: C
*Rationale: Price = P/E × EPS = 20 × 3 = 60.*



7. DuPont analysis decomposes ROE into three components.
Which is NOT one?

 A) Net profit margin

 B) Asset turnover

 C) Equity multiplier

 D) Dividend payout ratio

Correct Answer: D
Rationale: DuPont = (Net Margin) × (Asset Turnover) × (Equity
Multiplier).


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