100 - Chapter 5 Exam Questions and Answers Latest Update 2024 (100% Pass)
Accounts payable turnover - Answers A measure of the efficiency of the management of credit suppliers. It is usually expressed as the average days a firm takes to pay its debts to suppliers
Accounts receivable turnover - An...
Accounts payable turnover - Answers A measure of the efficiency of the management of credit suppliers.
It is usually expressed as the average days a firm takes to pay its debts to suppliers
Accounts receivable turnover - Answers A measure of the effieciency of management of credit
customers. It is usually expressed as the average days a credit customer takes to pay their debt to the
firm
Acid-test ratio (quick asset ration) - Answers Represents a more immediate measure of liquidity than the
current ratio by excluding less liquid current assets, such as inventory, and the less pressing liabilities,
often a bank overdraft
Asset turnover ratio - Answers Shows how effective an organisation is in generating income from its
total investment in assets by relating sales/service revenueto the value of total assets
Cash flow to sales ratio - Answers Indicates the efficiency of management in generating a net positive
cash inflow from its level of sales
Cash return on assets - Answers Represents how efficiently a firm generates cash from its total
investment in assets by showing the relationship between cash flow from operations before interest and
tax, and the value of total assets
Cash return on shareholders equity - Answers Shows the return in cash available to shareholders from
their investment in a firm
Cross-sectional comparisons - Answers Show the relationship between one organisation and another at
a particular point in time. It may also show the relationship with a benchmark at a single point in time
Current ratio (working capital) - Answers A measure of liquidity by showing the relationship between
current assets and current liabilities
Debt to assets ratio - Answers Measure the percentage of total funds provided by creditors and is
represented by total liabilities/total assets
Debt to equity ratio - Answers Indicates the quantity of debt finance in proportion to owners funds
Earning yield - Answers Relates the arnings of an organisation to what a shareholders pays for his or her
shares, or the shareholders right to particpate in the distribution of those earnings
Expense components ratio - Answers Represents the relative importance of various expenses or expense
categories in the earning prfit by comparing these to the sales for the period
Gross profit margin - Answers Represents the relationship between the gross profit earned for a period
and the sales for the same period
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