Nov 27: Quiz

Question 1

Ability to pay current debts from current assets

Answer 1

Current ratio

Question 2

Immediate ability to pay current debts from liquid assets

Answer 2

Acid-test (quick) ratio

Question 3

Ability to convert receivables to cash measured by the number of collection cycles

Answer 3

Receivables turnover

Question 4

Ability to sell inventories measured by the number of purchases and sales cycles

Answer 4

Inventory turnover

Question 5

Ability to service long-term debt

Answer 5

Times interest earned

Question 6

Proportion to assets provided by creditors compared to that provided by owners

Answer 6

Debt-equity ratio

Question 7

Proportion of total assets provided by creditors

Answer 7

Debt ratio

Question 8

Proportion of total assets provided by owners

Answer 8

Equity ratio

Question 9

Profit margin earned on each peso of sales

Answer 9

Return on sales

Question 10

Efficiency with which managers use total assets to operate the business

Answer 10

Return on total assets

Question 11

Rate of return earned by owners on their share

Answer 11

Dividend yield

Question 12

Amount of net income earned by each common share

Answer 12

Earnings per share

Question 13

Number of pesos required to P1 of earnings

Answer 13

Price-earnings ratio

Question 14

Return to owner on the investment required to buy one share of stock

Answer 14

Return on owners’ equity

Question 15

Proportion of earnings distributed as dividends

Answer 15

Dividend payout