What Does This Ratio Show? Flashcards
0
Q
Debt to equity ratio shows…
A
If the firm is reliant on debt such as borrowing money. Higher it is the less solvent it is and higher risk.
1
Q
Current ratio shows…
A
The short term financial stability (ability to meet short term financial commitments)
2
Q
Net profit shows…
A
Represents the profit to owners
3
Q
Return on equity shows…
A
How effective funds have contributed into generatinf profit (return of investment)
4
Q
Expense ratio shows…
A
High expense ratio be the result of poor management and shows the amount of sales allocated to expenses
5
Q
Accounts receivable turniver ratio shows…
A
Measures effectiveness of firms policy into collecting debt
