58. The receivables turnover ratio offers an indication of how quickly a company is able to. B The use of alternative accounting methods: A. is not a problem in ratio analysis because the footnotes disclose the method used. The new plan would place the debt ratio at 55 percent, which will result in interest charges of $7,000 per year. A liquidity ratio is a type of financial ratio used to determine a company's ability to pay its short-term debt obligations. 65. What is the formula for the profit margin ratio? If Nadine has an accident on such an errand, what are the potential consequences for Sols business and his personal assets. Efficiency ratio: If Randolph Corp. has accounts receivables of $654,803 and net sales of $1,932,349, what is its accounts receivable turnover? Coverage ratios: Fahr Company had depreciation expenses of $630,715, interest expenses of $112,078, and an EBIT of $1,542,833 for the year ended June 30, 2006. & \mathbf{2014} & \mathbf{2013}\\ Which of the following describes the liquidity ratios? Limitations of ratio analysis include all but. $$ solvency Businesses should strive for an absolute liquidity ratio of 0.5 or above. a) current ratio b) asset turnover c) inventory turnover d) receivables turnover Accounting Cost Accounting Financial Accounting CMA managerial accounting Question added by Said Shaban , Accountant , Tri State Materials Testing Date Posted: 2015/08/05 Financial statements can be analyzed from the following three different perspectives: Shareholders analyze financial statements in order to: The creditors of a firm analyze financial statements so that they can focus on. Leverage ratio: What will be a firm's equity multiplier given a debt ratio of 0.45? a. b. a. b ________ refers to a company's ability to pay its long-term liabilities. equivalent. 80. $$ 82. Which of the following are common synonyms of the gross profit ratio? What is the firm's current ratio? Inventory changed from $30,000 last year to $10,000 this year. 60. Which of the following items requires separate disclosure after income from continuing operations? What does the statement of changes in net assets tell managers? What is its cash coverage ratio? Absolute liquidity ratio pits marketable securities, cash and equivalents against current liabilities. Low or tight liquidity occurs when cash is tied up in non-liquid assets, or when interest rates are high, since that makes borrowing cost more. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. ________ refers to a company's ability to pay its long-term liabilities. This analysis is important for lenders and creditors, who want to gain some idea of the financial situation of a borrower or customer before granting them credit. 21-September-2014 Follow Which of the following is not a liquidity ratio? 79. All but one of the following is true of common-size income statements. The liquidity ratios are a result of dividing cash and other liquid assets by the short term borrowings and current liabilities. It is used by creditors for determining the relative ease with which a company can clear short term liabilities. 44. \text { Income before income tax expense } & 5,544,000 & 4,400,000 Which of the following is classified as a liquidity ratio? Liquidity ratios are a financial metric that measures a company or an individual's ability to meet short-term debt obligations. Mathematically, the current ratio is expressed as current assets divided by ________ ________. Return on assets is calculated as net income divided by, The profit margin ratio is defined as ________ ________ divided by net sales. The Acid-Test Ratio, also known as the quick ratio, is a liquidity ratio that measures how sufficient a company's short-term assets are to cover its current liabilities. DuPont equation: Sorenstam Corp has an equity multiplier of 2.34 times, total assets of $4,512,895, a ROE of 17.5 percent, and a total assets turnover of 3.1 times. What is the company's inventory turnover ratio? Then create a word search puzzle using the sentences-without the word as clues. Many investors view this type of indicator as the number one measure of a company's success. \text { insurable risk } & \text { natural risk } & \text { decade } & \text { undergo } \\ 45. 73. Use each of these words in a sentence that reflects the word's meaning in the chapter. 64. Three liquidity ratios are commonly used - the current ratio, quick ratio, and cash ratio. What is the formula to compute the average days in inventory? \text { risk management } & \text { human risk } & \text { minimize } & \text { mode } \\ Though these liquidity ratios may be considered simplistic, they're instrumental in determining if a company will survive adverse economic conditions. Mark should compare the company's performance to: Vertical analysis is also commonly known as ________ - size analysis. Which of the following ratios provides the most conservative measure of a firms ability to pay its current liabilities. Calculate her monthly payments without the points. 81. When comparing the financial statements of two different companies, a financial analyst would use which two categories of ratios? Write your answers in simplest terms. A company's ability to pay its long-term debt is referred to as: Trend analysis and time-series analysis refer to ________ analysis. Liquidity ratio: Ronaldinho Trading Co. is required by its bank to maintain a current ratio of at least 1.75, and its current ratio now is 2.1. Efficiency ratio: If Viera, Inc., has an accounts receivable turnover of 3.9 times and net sales of $3,436,812, what is its level of receivables? In other words, the acid-test ratio is a measure of how well a company can satisfy its short-term (current) financial obligations. Explain. A Current ratio B. Debt-to-equity ratio C. Quick ratio D. Flved asset turnover ratio (1) and (2) only (1) and (3) only O (2), (3) and (4) only All of the above This problem has been solved! b. Which one of the following does NOT change a firm's current ratio? Their adjusted gross income was$45,208. At the $10 \%$ significance level, do some medians differ? Is the number of times interest charges are earned improving or declining? Liquidity ratio: Bathez Corp. has receivables of $334,227, inventory of $451,000, cash of $73,913, and accounts payables of $469,553. 46. Compute the firm's price-earnings ratio. Which one of the following statements about trend analysis is NOT correct? Which one of the following is NOT an advantage of using ROE as a goal? Gross margin is a synonym for gross _________. 76. b. The average collection period equals 365 days divided by ______. One of the following statements is NOT true of asset turnover ratios. Which of the following is an example of conservative accounting? What is the formula for the inventory turnover ratio? Leverage ratio: Dreisen Traders has total debt of $1,233,837 and total assets of $2,178,990. 38. Sol hired Nadine to deliver the tickets in his car to the theaters just as the tour buses arrived. Liquidity ratios measure the company's ability to pay off short-term debt obligations. Compute the inventory turnover ratio using the following information: Net sales is $100,000 for the year, costs of goods sold are $40,000, last year's assets in place were $900,000, and this year's assets in place are $1,100,000. Question: 15 1. DuPont equation: Andrade Corp has debt of $2,834,950, total assets of $5,178,235, sales of $8,234,121, and net income of $812,355. The accounts receivable turnover ratio is the liquidity ratio. Which of the following items would be reported at the bottom of the income statement, just before net income? Which of the following is considered a solvency ratio? 63. 57. When assessing a company's credit risk: a. Calculate the firm's ROA. Which of the following is an example of an aggressive accounting practice in relation to the reporting of net income? Accounts receivable was $10,000 at the beginning of the year and $14,000 at the end. Coverage ratio: Trident Corp. has debt of $3.35 million with an interest rate of 6.875 percent. Specify the competing hypotheses to test whether some differences exist between the medians. Practices that result in reporting lower income, lower assets, and/or higher liabilities. Trend or time-series analysis is another term used for ____ analysis, Common-size analysis is another term used for ____ analysis. Which statements about the inventory turnover ratio are correct? horizontal analysis Trend or time-series analysis is another term used for ____ analysis vertical analysis Common-size analysis is another term used for ____ analysis Solvency The times interest earned ratio is classified as an indicator of a company's: Profitability ratio: Juventus Corp has total assets of $4,744,288, total debt of $2,912,000, and net sales of $7,212,465. The formula for return on equity is ________ ________ divided by average total shareholders' equity. 74. 49. Key Terms. Which of the following is NOT true of liquidity ratios? Net credit sales revenue divided by average accounts receivables equals the _____ turnover. 1. What are the firm's equity multiplier and debt-to-equity ratio? See Answer Show transcribed image text Expert Answer 100% (9 ratings) 40. Which of the following ratios is NOT considered to be a liquidity ratio? To calculate the accounts receivable turnover ratio, accounts receivable is taken. 36. Include requirements you would impose and the habits of a roommate you would reject. liquidity ratio: total cash and equivalents divided by short-term borrowings 59. All but one of the following is true about quick ratios. What was the Rossinis exact taxable income? Which of the following best describes the asset efficiency ratios? A firm's management analyzes financial statement's so that: Anyone analyzing a firm's financial statements should. 62. C) Ratios can be calculated based on the type of firm being analyzed or the kind of analysis being performed. For a firm that has both debt and equity. c . The debt to equity ratio is calculated as. The profit margin is calculated by dividing, Asset turnover ratio is net sales divided by. Which one of the following is a criticism of equating the goals of maximizing the ROE of a firm and maximizing the firm's shareholder wealth? \begin{array}{llll} 70. \hline \text { Interest expense } & \$ 440,000 & \$ 400,000 \\ all: establishing facts about an organization, comparing facts about an organization over time, and making decisions on the basis of fact comparisons, Four types of ratios used in financial analysis are, liquidity, profitability, activity, and capital structure, It looks at the internal structure of the organization by comparing a base number and percentages of important line items, The balance sheet displays an organization's. Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations. Receivables for both years are $40,000. $$ Question: Which of the following is a liquidity ratio? Common types of analysis that help assess a specific company's performance include comparisons: Common-size analysis is another term used for a ____ analysis. All of the other answers are examples of aggressive accounting. Liquidity ratio: Lionel, Inc., has current assets of $623,122, including inventory of $241,990, and current liabilities of 378,454. 78. Liquidity ratio for a business is its ability to pay off its debt obligations. Deciding to remove a loss contingency when the likelihood of an unfavorable decision is probable. Based on the information given, calculate the firm's gross profit margin and operating profit margin. A liquidity ratio is used to determine a company's ability to pay its short-term debt obligations. Which of the following is NOT an asset efficiency ratio? What is the firm's return on equity? 72. Which of the following is classified as a liquidity ratio? Recording the lowest possible warranty expense. The quick ratio is always between 0 and 1. d. All the above statements are true. Good financial reports have which of the following characteristics, the organization provided services WITH the expectation of payment, Organizations may present cash flow using, either the direct method or the indirect method, The organization must calculate age of plant ratio to determine whether an older facility is causing, Fundamentals of Financial Management, Concise Edition, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas, Divide. Why net assets changed from the beginning of the statement period to the end of the statement. Which of these are the same as horizontal analysis? Analysts use only the statement of cash flows. Which of the following is a profitability ratio? What are the times interest earned and cash coverage ratios for this company? See the answer Show transcribed image text Expert Answer b. They are measures of an organization's ability to meet short-term obligations. Efficiency ratio: Jet, Inc., has net sales of $712,478 and accounts receivables of $167,435. current ratio is a short term indicator of the companys ability to pay its short term liabilities from its short term assets; how much of current assets are available to cover each dollar of current liabilities quick (acid test) ratio measures the companies ability to pay short term obligations from its current assets, excluding inventory 69. Which of the following is the formula for the current ratio? 50. The firm has 420,000 shares outstanding and a P-E ratio of 11.2 times. A Current ratio B. Debt-to-equity ratio C. Quick ratio D. Flved asset turnover ratio (1) and (2) only (1) and (3) only O (2), (3) and (4) only All of the above. What is the formula for the receivables turnover ratio? We review their content and use your feedback to keep the quality high. Which of the following are liquidity ratios? Coverage ratios: Sectors, Inc., has an EBIT of $7,221,643 and interest expense of $611,800. 37. Mark wants to determine whether a specific company has become more profitable over time. Other than cash itself, assets with the highest liquidity include: 67. Financial analysis can be used to detect apparent liquidity problems. 42. Company A has an accounts receivable turnover of 8.0. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Daniel F Viele, David H Marshall, Wayne W McManus, Don Herrmann, J. David Spiceland, Wayne Thomas, On a separate sheet of paper, explain the following term by using it correctly in a sentence. ***Instructions*** Determine the number of times interest charges are earned for 2014 and 2013. High liquidity occurs when an institution, business, or individual has enough assets to meet financial obligations. Which one of the following statements is NOT correct? A ratio of 1:1 is recommended, but not necessarily a minimum. All else being equal, which one of the following will decrease a firm's current ratio? What does the inventory turnover ratio measure? 47. The company's share price is $13.45, and the company has 312,490 shares outstanding. 41. Which of the following is a capital structure ratio? What are the main liquidity ratios? Which of the following is true of ratio analysis? What is its times interest earned? The three main liquidity ratios are the current ratio, quick ratio, and cash ratio.. see more Is a liquidity ratio of 4 good? Liquidity ratio of . 39. \begin{array}{lcr} Multiple Choice Current ratio Net working capital ratio Debt-equity ratio Market-to-book ratio Net profit margin Expert Answer 100% (27 ratings) The correct answer is first option. Which of the following account does NOT appear on the statement of operations? B. Green Company has net credit sales of $100,000, an asset turnover ratio of 4, and a receivables turnover ratio of 9. A LOSS from discontinued operations is reported? The ________ margin measures the income earned on each dollar of sales. Expert Answer. Which of the following is a negative indicator regarding a company's ability to turn its receivables into cash? True or False: Risk ratios and profitability ratios represent common ratios used for analysis. a. Which of the following is a ratio used to evaluate a company's solvency? Higher values indicates profitability in which of the following profitability ratios? (Round off to the nearest 0.1%). 75. Cash ratio is a measure of a company's liquidity in which it is measured whether the company has the ability to clear off debts only using the liquid assets (cash and cash equivalents such as marketable securities). These ratios measure the ability of a company to pay off its short-term liabilities when they fall due. \text { uncontrollable risk } & \text { insurance policy } & & \\ The ________ profit ratio indicates the portion of each dollar of sales above the cost of goods sold. Typically, the following financial ratios are considered to be liquidity ratios: Current ratio; Quick ratio or acid test ratio; The amount of a company . (c) What criticism of IFRS is raised with regard to regulated companies. 61. What is the firm's quick ratio? Current ratio The current ratio is calculated by dividing the current assets The liquidity ratio tells about a business's ability to pay off its debts. \text { controllable risk } & \text { hazard } & & \\ All but one of the following is true about the inventory turnover ratio. What is its debt-to-equity ratio? The bank offered Annette a $380,000, 30-year mortgage at 3.54%. Conservative accounting practices refer to: If a company's sales revenue and cost of goods sold increase by a higher percentage than its inventory balances, inventory turnover will: Power Equipment incurred a material loss due to business restructuring. $$. If firm A has a higher debt-to-equity ratio than firm B, then. \text { pure risk } & & & Option a, current ratio is a liquidity ratio and measures the ability of a company to pay its short-term obligations. The liquidity ratio includes the current assets or current liability as it has a state of liquidity immediately. These include cash, cash equivalents, marketable securities, short-term investments, and current account receivables. 15 1. Receivables for both years are $50,000. True or false: The debt to equity ratio is calculated as total liabilities divided by common stock. Recipes' accounts receivables turnover equals: Which of the following is a solvency ratio? A liquidity ratio is a financial ratio that indicates whether a company's current assets will be sufficient to meet the company's obligations when they become due. (Enter one word per blank), The sum of cash, current investments, and accounts receivable divided by current liabilities equals the. Profitability ratios: Tigger Corp. has reported the financial results for year-end 2006. Peer group analysis can be performed by, 55. d. The assessment involves looking only at the operating and cash conversion cycles. Its depreciation for the year is $1,434,500. Sales = $100,000 | Cost of Goods Sold = $15,000 | Gross Profit = ? Which of the following is an example of horizontal analysis? The liquidity ratios are a result of dividing cash and other liquid assets by the short term borrowings and current liabilities. It looks at the internal structure of the organization by comparing a base number and percentages of important line items The balance sheet displays an organization's net assets, liabilities, and assets Fundamentals of Financial Management, Concise Edition, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Don Herrmann, J. David Spiceland, Wayne Thomas, Carl S Warren, James M Reeve, Jonathan E. Duchac. The higher the current ratio, the more likely a firm is able to pay its short-term obligations.c. A firm's liquidity is measured with which one of the following ratios? Which of the following is true of ratio analysis? (Enter one word per blank). High liquidity also means there's a lot of financial capital. 2003-2022 Chegg Inc. All rights reserved. a. current ratio b. inventory turnover ratio c. conversion ratio d. profit margin on sales e. none of these b Tammy is a production manager at Eagle's Nest, Inc.. Leverage ratio: Your firm has an equity multiplier of 2.47. How to Calculate Liquidity Ratio (Step-by-Step) Liquidity is defined as how quickly an asset can be converted into cash - so assets that can be sold and turned into cash in a short amount of time are considered to be highly liquid (and vice versa for assets with low liquidity). Which of the following ratios are used to evaluate a company's ability to pay long-term debts? Liquidity ratios measure a company's ability to pay debt obligations and its margin of safety through the calculation of metrics including the current ratio , quick ratio and operating cash flow . \end{array} A) Liquidity Given the following information, what is the Return on Equity? Efficiency ratio: Deutsche Bearings has total sales of $9,745,923, inventories of $2,237,435, cash and equivalents of $755,071, and days' sales outstanding of 49 days. Which ratio indicates the portion of each sales dollar above its cost of goods sold? Each point will cost 1% of the loan value. \text { uninsurable risk } & \text { peril } & & \\ What is the firm's days' sales in inventory? When using vertical analysis, we express INCOME STATEMENT items as a percentage of: When using vertical analysis, we express BALANCE SHEET items as a percentage of: which of the following is considered a liquidity ratio? A liquidity ratio b. 66. What is the firm's cost of goods sold? Firms Clash Over Accounting Rules. The article discusses why some U.S. companies favored adoption of International Financial Reporting Standards (IFRS) while other companies opposed it. What is the average collection period? Which information regarding the receivables turnover ratio is true? Coverage ratios, like times interest earned and cash coverage ratio, allow. O Productivity ratios O Acid-test ratio O Inventory turnover ratio low MT Total debt ratio w This problem has been solved! Which of the following are profitability ratios? Analysts use only financial ratios and do not need to review the statement of cash flows. DuPont equation: GenTech Pharma has reported the following information: 77. Which of the following is a benefit of a common-size income statement? Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio? The lower the quick ratio relative to the current ratio, the safer a firm is in terms of liquidity. Used to measure the relative efficiency of a company based on the use of its assets, leverage, or other balance sheet items. 5 \frac{2}{5} \div \frac{3}{4} What is the formula to compute return on shareholders' equity? Which of the following items are included in the numerator for the current ratio but are excluded from the numerator of the quick or acid-test ratio? An individual analyzing a firm's financial statements should do all but one of the following: All but one of the following is true of common-size balance sheets. Their net profit margin for the year is 18 percent. The average collection period is calculated as 365 divided by, The formula to compute the receivables turnover ratio is net credit sales divided by. Which of the following would be considered an aggressive accounting practice? D. Some industry ratio formulas vary from source to source. True or false: The times interest earned formula is net income divided by interest expense. Read the article and answer the following questions. Compute the average days in inventory ratio using the following information: Net sales is $200,000 for the year, cost of goods sold are $80,000, last year's total assets were $900,000, and this year's total assets are $1,100,000. For a firm that has no debt in its capital structure. It is a measure used by analysts to determine a company's solvency. Which is typically preferable for a company? ________ refers to a company having enough cash or convertible assets to pay its current liabilities. 43. Examples of Liquidity Ratios. Which one of the following statements is NOT true? 71. $$. The times interest earned formula is calculated as earnings before interest and taxes divided by ________ ________. The firm plans to acquire additional inventory to meet an unexpected surge in the demand for its products and will pay for the inventory with short-term debt. 35. Liquidity ratio analysis is the use of several ratios to determine the ability of an organization to pay its bills in a timely manner. They measure the relationship of revenues to expenses. Four types of ratios used in financial analysis are liquidity, profitability, activity, and capital structure What does vertical analysis do? The firm maintains a debt ratio of 30% and has total assets of $3,000,000. b. collect its accounts receivable. The group of ratios that measure the earnings or operating effectiveness of a company are referred to as ________ ratios. \text { insurance } & \text { premium } & \text { occurrences } & \text { conversely } \\ This loss should be reported as: A loss due to an employee strike should be reported as: Which of the following ratios is more USEFUL in evaluating solvency? (Enter one word per blank). | Income Tax Provision = $19,500 | Net Income = ? Inventory was $18,000 at the beginning of the year and $22,000 at the end. The higher the liquidity ratio the higher will be the margin of safety. Formula: Absolute liquidity ratio = (Cash and equivalent + marketable securities)/current liabilities Example of absolute liquidity ratio Basic defence ratio What is the formula to compute the return on assets? The best ratio to evaluate short-term liquidity is: (A) Working capital turnover ratio (B) Current ratio (C) Creditors velocity (D) All of the above Answer: (B) Current ratio Question 12. Experts are tested by Chegg as specialists in their subject area. If the firm's management wanted its DSO to be 35 days, by how much will the accounts receivable have to change? Which of the following describes profitability ratios? Averill Products Inc. reported the following on the companys income statement in 2014 and 2013: Which of the following is true? She is deciding whether to purchase 2 points to reduce her APR by 0.25% per point. They measure the relationship between assets and revenues. Efficiency ratio: Gateway Corp. has an inventory turnover ratio of 5.6. The price of a single share of stock divided by earnings per share is: ________ of ________ refers to the ability of reported earnings to reflect a company's true earnings, as well as the usefulness of reported earnings to predict future earnings. In preparing their tax return, the Rossinis, a married couple, claimed 5 exemptions at $3,500 each, and the standard deduction. The metric helps determine if a company can use its current, or liquid, assets to cover its current liabilities. All: nondirectional, the basic indicator of financial liquidity, and calculated by dividing total current assets by total current liabilities. What are the firm's accounts receivables turnover and days' sales outstanding? What is the quick ratio? d. generate cash from financing activities. liquidity The receivables turnover ratio offers an indication of how quickly a company is able to a. pay for its inventory. All: return on net assets, operating margin, and excess margin. Return on Equity: In the latest year, Photon, Inc. reported $276,000 in net income. Which term best describes a company having a suitable amount of cash or easily-convertible assets to pay incurred current liabilities? A company can improve its liquidity ratios by raising the value of its current assets, reducing current liabilities by paying off debt, or negotiating delayed payments to creditors. This ratio is used by creditors and lenders to know how much time to delay the credit. The July 6, 2011, edition of the *Wall Street Journal Online* includes an article by Michael Rapoport entitled U.S. The company's current ratio of 0.4 indicates an inadequate degree of liquidity with only 40 cents of current assets available to cover every $1 of current liabilities. The company has an EBIT of $2,766,009. Company B has an accounts receivable turnover of 10.0. | Total Assets = $200,000 | Book Value of Equity = $125,000 A) 36.40% B) 22.75% C) 45.5% D) 15% Which one of the following statements is NOT correct? sentence. \text { risk } & \text { economic risk } & \text { criteria } & \text { retain } \\ Basics of Liquidity. c. Both liquidity and solvency must be reviewed. 52. See Answer Show transcribed image text Expert Answer 100% (15 ratings) Acid test ratio is also known as quick Ratio.It is one of the example of liquidity ratio.The other examples of liquidity ratio are Current ratio & Cash Ra View the full answer Transcribed image text: Which of the following ratios is most useful in evaluating liquidity? 48. Which of the following are liquidity ratios? You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The ________ - ________ ratio provides a more conservative measure of a company's ability to pay its current liabilities from current sources. Consider the following sample information: $k=3$ and $H=4.5$. EBIT is projected to be $25,000 on sales of $270,000, it expects to have a total assets turnover ratio of 3.0, and the average tax rate will be 40 percent. Which one of the following statements is correct? (Round to nearest whole percent). The liquid ratio is calculated by dividing the liquid assets by the current liabilities. The DuPont equation shows that a firm's ROE is determined by three factors: 51. DuPont equation: Saunders, Inc., has a ROE of 18.7 percent, an equity multiplier of 2.53, sales of $2.75 million, and a total assets turnover of 2.7 times. An activity ratio c. Return on total assets d. A current ratio e. Profit margin on sales c The _____ is purchase orders divided by customer inquiries. Which of the following ratios is NOT a liquidity ratio? All sales were credit sales. It measures company's liability to pay off the short term dues when they are due. Market-value ratio: RTR Corp. has reported a net income of $812,425 for the year. Higher the liquidity ratio higher is the safety. 53. 54. You can work out the current ratio using the following liquidity ratio formula: Current Ratio = Current Assets / Current Liabilities Quick ratio - Also known as the acid-test ratio, the quick ratio looks at whether you're able to pay off your liabilities with quick assets, which are assets that you can convert to cash within the space of 90 days. What does Roland & Company expect its return on equity to be following the . Liquidity ratio: Zidane Enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of 197,333. Round to one decimal place. The average collection period is an estimate of. 100% (1 rating) Liquidity ratios are the ratios which tell the company's ability to meet its short term obligations. The formula for the inventory turnover ratio is, Average days in inventory is calculated as 365 days divided by the, The formula for average collection period is. 68. Then write a paper explaining what you are looking for in a roommate. c. generate revenue. The quick ratio, also known as the acid-test ratio, measures the ability of a company to pay all of its outstanding liabilities when they come due with only assets that can be quickly converted to cash. The DuPont Analysis uses the following ratios except: (A) Debt ratio (B) Profit margin (C) Total asset turnover (D) Financial leverage Answer: (A) Debt ratio They can be used to see if a company can repay its debt to its lenders and pay suppliers. Financial analysis includes which of the following steps? What is Photon's return on equity? What is Juventus's ROA? Efficiency ratio: Ellicott City Manufacturers, Inc., has sales of $6,344,210, and a gross profit margin of 67.3 percent. To predict the future and plan strategies that will influence the future. Comparing a balance sheet account over time. Inventory changed from $30,000 last year to $10,000 this year. Which of the following statements about liquidity ratios is true? A liquidity ratio greater than 1 is a good ratio, which shows the good financial health of the company. | Operating Expenses = $20,000 | Operating Income = ? paddy, On a sheet of paper, use each of these key terms and academic vocabulary terms in a Which of the following is NOT an operating indicator? Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price. What is the firm's net income? 56. How much inventory can the firm purchase without violating its debt agreement if their total current assets equal $3.5 million? The times interest earned ratio is classified as an indicator of a company's: Recording inventory at lower of cost or net realizable value. \end{array} Which of the following is an example of aggressive accounting? 83. A) A ratio is computed by dividing one balance sheet or income statement by another. The current ratio, acid-test ratio, and average collection period are ratios that provide information about a company's: Recipes, Inc. had Sales of $120,000 and Cost of goods sold of $80,000 for the year. What is the firm's share price? The ability of reported earnings to reflect the company's true earnings is referred to as: What is the formula for the asset turnover ratio? C. There are as many ratios for financial analysis as there are pairs of figures. B) The choice of the scale determines the story that can be garnered from the ratio. \text { Key Terms } & & \text{Academic Vocabulary } \\ $$ Efficiency ratio: Jason Traders has sales of $833,587, a gross profit margin of 32.4 percent, and inventory of $178,435. Write a roommate-wanted ad. 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