reading act textbook

Question 1

what does the current ratio compare

Answer 1

current assets and current liabilities

Question 2

what kind of ratio is current

Answer 2

liquidity

Question 3

what does a high current ratio indicate

Answer 3

that a company has sufficent crrent assets to pay current liabilities as they are due

Question 4

what is the formula for current ratio

Answer 4

current assets / current liabilities

Question 5

what is solvency

Answer 5

a companys abilitiy to pay its long term liabilities

Question 6

what is there a high chance of if there is a high debt to equity ratio

Answer 6

bankruptcy

Question 7

what does the debt to equity ratio show

Answer 7

if a companys debt is too high

Question 8

what is the formula for debt to equity

Answer 8

Total liabilities / stockholders equity

Question 9

what does the gross profit ratio show us?

Answer 9

portion of each dollar of sales above its cost of goods sold

Question 10

how do you calculate gross profit ratio

Answer 10

Gross profit / net sales

Question 11

what does the price-earnings ratio compare

Answer 11

compares a companys share price with itd earnings pershare

Question 12

what do investors infer with this ratio

Answer 12

it ties with the investors assesment of a companies future profitability

Question 13

one way to think about the price to earnings ratio

Answer 13

represents investorys expectaion of earnings growth

Question 14

Verticle analysis in income statement

Answer 14

% of sales

Question 15

verticle analysis in the balance sheet

Answer 15

% of total assets

Question 16

when do we use horixontle analysis

Answer 16

to analyze trends of one company duriing a time period

Question 17

what do operating activities include

Answer 17

revenue and expenses

Question 18

how do you calculate operating activities

Answer 18

indirect method

Question 19

what do investing activities include

Answer 19

the purchase and sale of long term assets

Question 20

what do financing activities include

Answer 20

long term liabilities and stock holders equity

Question 21

what cash flow is collection of notes recievable

Answer 21

investing

Question 22

what cash flow is repayment of notes payable

Answer 22

financing

Question 23

what cash flow invloves current liab and current assets

Answer 23

operating

Question 24

what is simple interest earned on

Answer 24

initial investment

Question 25

future value

Answer 25

how much an amount today will grow to be in the future

Question 26

compound interest

Answer 26

interest earned on initial investment and previous interest

Question 27

present value

Answer 27

how much an amount in the future is worth today

Question 28

example of present value

Answer 28

what is it worth today to recieve 1,000 in three years

Question 29

what are changes in the fair value reported as

Answer 29

gains or losses

Question 30

how do you find the equity method formula

Answer 30

initial investment + (% x end NI) - (% x dividends)

Question 31

inventory turnover

Answer 31

how many times a company has sold and replaced inventory in a given time period