WGU C213 TEST QUESTIONS WITH GUARANTEED CORRECT ANSWERS

Financial statement analysis - correct answer Involves relationships and trends Analyzing financial statements, prognosis is - correct answer Prediction of how a business will perform in the future External users of financial statements use financial statement analysis for - correct answer Investing decisions Purpose of financial statement analysis - correct answer Diagnosis and Prognosis Liquidity - correct answer Ability a company has to pay its debts in the short run Asset turnover - correct answer Measures a firm's efficiency at using its assets Return on Equity (ROE) 1 - correct answer Fundamental measure of overall company performance Price-earnings ratio - correct answer Represents an indication of investor's expectations concerning a firm's growth potential Return on Equity (ROE) 2 - correct answer Calculated using numbers from both the income statement and the balance sheet Debt Ratio - correct answer used to measure a firm's leverage Return on Sales - correct answer Used to measure the profit earned on each dollar of sales in a firm Asset turnover equation - correct answer Sales revenue/Common stock + Total investments + Total PPE (property, plant, equip) Return on equity eq