ACCounting Made Simple 07

Question 1

1. Once you’ve read the company’s financial statements, how do you analyze them in depth?

Answer 1

by calculating and comparing several different financial ratios.

Question 2

2. What are some of the common ratios to be analyzed?

Answer 2

1. Liquidity Ratios
2. Profitability Rations
3. Financial Leverage Ratios
4. Asset Turnover Ratios.

Question 3

3. What are the common LIQUIDITY RATIOS?

Answer 3

1. Current Ratio

2. Quick Ratio

Question 4

4. What are the common PROFITABILITY RATIOS?

Answer 4

1. Return on Assets
2. Return on Equity
3. Gross Profit Margin

Question 5

5. What are the common FINANCIAL LEVERAGE RATIOS?

Answer 5

1. Debt Ratio

2. Debt to Equity Ratio

Question 6

6. What are the common ASSET TURNOVER RATIOS?

Answer 6

1. Inventory Turnover
2. Average Turnover
3. Inventory Period
4. Receivables Turnover
5. Average Collection Period.