Book5 reviw ratios

Question 1

liquid ratios

Answer 1

measures of a firms short-term ability to pay maturing obligations

Question 2

activity ratios

Answer 2

are measures of how effictively an enterprise is using its assets

Question 3

profitability ratio

Answer 3

measures the financial perforamnce of an enterprise for a given time pedriod.

Question 4

investor Ratio

Answer 4

investoer ratios measure that are of interest to investors

Question 5

Log-term debt paying ability ratios

Answer 5

Coverage ratios are measure of security for long-term creditors/ investors

Question 6

working capital

Answer 6

Current assets - current liabilities

Question 7

Current ratios

Answer 7

Current assets/ current liabilities

Question 8

Acid test raio (liquid test ratio)

Answer 8

(Cash+ Market SEC. + Acct Rec.) / current liabilities

Question 9

Cash ratio

Answer 9

(cash + Marektabl;e securites)/ Current liabilites

Question 10

Activeity ratios

Answer 10

Mostly concern with turnover and avearge balances

Question 11

Accounts reveivables turn over

Answer 11

(net credit sales)/ Average net receivables

Question 12

Accounts reveivables turn over in days

Answer 12

(365) / receivable turnover

Question 13

inventory turnover

Answer 13

(cost of goods sold) / average inventory

Question 14

inventory turnover in days

Answer 14

365/ inventory turnover

Question 15

operating cycle

Answer 15

AR turnover in days + invetory turnover in days

Question 16

working capital turnover

Answer 16

Sales/ (Average working capital)

Question 17

Total sets turnover

Answer 17

Net sales / Average totatl assets

Question 18

Accounts payable turnover

Answer 18

Purchases/ Average accounts payable

Question 19

Days in Account payable

Answer 19

365/ account payable turn over