Ratios Flashcards
1
Q
if current ratio declines that means
A
Ability to meet short term obligations declined
2
Q
If liquidity ratios decline that means
A
Trouble meeting short term needs
3
Q
If AR turnover decreases
A
Faster turnover is better
4
Q
If days sales in AR increases
A
More time to collect AR
5
Q
If inventory turnover increases
A
Better performance (COGS increasing - more things sold, Average inventory decreasing - more things sold)
6
Q
Days in inventory decreasing
A
Good thing, average number of days required to sell inventory decreasing
7
Q
AP Turnover decreasing
A
(COGS/Average AP); delays in payment
8
Q
Asset turnover increasing
A
Effective use of assets to generate revenue
9
Q
Debt to equity decreasing
A
Lower amount of debt
