D076 - Ratios Exam Questions & Answers 100% Accurate
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D076 - Ratios
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D076 - Ratios
Current Ratio - ANSWER-Is a liquidity ratio. Short-term debt paying ability.
Current Assets/Current Liabilities
Quick Ratio - ANSWER-Also known as acid test. Is a liquidity ratio. Provides a more accurate cash position of firm by excluding inventory from current assets.
Current Assets-In...
D076 - Ratios Exam Questions & Answers 100% Accurate
Current Ratio - ANSWER-Is a liquidity ratio. Short-term debt paying ability. Current Assets/Current Liabilities
Quick Ratio - ANSWER-Also known as acid test. Is a liquidity ratio. Provides a more accurate cash position of firm by excluding inventory from current assets. Current Assets-Inventory/Current Liabilities
AR Turnover - ANSWER-Is an activity/asset management ratio. Helps to identify how quickly these accounts receivables turn over during a given year. A rate of 12 indicated that the company is collecting once a month. If less or decreasing then it may indicate that the company is taking longer to collect. Credit Sales/Accounts Receivable
Average Collection Period (ACP) - ANSWER-Is an activity ratio. Convert AR turnover into a day count measure. 365/AR Turnover
Inventory Turnover - ANSWER-Is an activity ratio. Measures the efficient use of inventories. A high number may indicate whether there is enough product on hand; a lower number may indicate it's taking too long to turnover inventory. Cost of Goods Sold/Inventory
Total Asset Turnover (TAT) - ANSWER-Is an activity ratio. Is calculated to see how well a company is using its assets to generate sales. The ratio measures how many dollars in sales the firm generates per dollar of assets.
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