Lesson 6

Question 1

Express the relationship among specific financial statement data

Answer 1

Financial statement

Question 2

Measures the ability of the company to control costs and generate income from the use of its assets and invested capital

Answer 2

Profitability ratio

Question 3

Margin measures the peso value Of the gross profit earned for every peso of sales

Answer 3

Gross profit margin

Question 4

Margin express operating income as a percentage of sales

Answer 4

Operating profit margin

Question 5

Margin measures the peso value of net income earned for very peso of sales

Answer 5

Net profit margin

Question 6

is measured based on the company’s ability to generate sales from its utilization of assets as a whole or individual.

Answer 6

Net profit margin

Question 7

ratio is an indicator of the efficiency with which the company is utilizing all its assets

Answer 7

Asset turnover

Question 8

is an indicator of how fast the company can sell its inventory

Answer 8

Inventory turnover

Question 9

to the company’s capacity to pay its long term liabilities while liquidity ratio measures the company’s ability to pay short term debts.

Answer 9

Solvency

Question 10

indicates the company’s reliance on debt was a source of financial relation to equity .

Answer 10

Debt to equity ratio

Question 11

indicates the percentages of the company assets that are financed by debt.

Answer 11

Debt ratio

Question 12

refers to comparing the company’s growth performance, common size financial statement and financial ratios against the industry average, another company , its historical performance and established forecasts or targets.

Answer 12

Benchmarking