Master Financial Ratios

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Which of the following statements is true about a current ratio of 2 to 1 for a company in any industry?

A current ratio of 2 to 1 is sometimes acceptable. (correct)

A current ratio of 2 to 1 is never acceptable.

I don't know.

A current ratio of 2 to 1 is always acceptable.

What is a banker or trade creditor most concerned about when evaluating a firm?

A firm's solvency ratios.

A firm's profitability ratios. (correct)

I don't know.

A firm's liquidity ratios.

How do asset utilization ratios relate balance sheet assets to income statement sales?

Asset utilization ratios assess the profitability of balance sheet assets.

Asset utilization ratios measure the liquidity of balance sheet assets.

I don't know.

Asset utilization ratios compare balance sheet assets to income statement sales. (correct)

What do debt utilization ratios indicate about the strength of a firm?

Debt utilization ratios indicate the strength of the firm regarding its coverage of interest payments. Signup and view all the answers

What does the debt-to-equity ratio measure?

The debt-to-equity ratio measures a firm's financial leverage. Signup and view all the answers

Which one of the following statements is true about a current ratio of 2 to 1 for a company in any industry?

B) It is sometimes acceptable Signup and view all the answers

What is the purpose of asset utilization ratios?

C) Relate balance sheet assets to income statement sales Signup and view all the answers

What do debt utilization ratios indicate about the strength of a firm?

B) The firm's coverage of interest payments Signup and view all the answers

Which of the following statements is true about the debt-to-equity ratio?

A) It measures a firm's financial leverage Signup and view all the answers

What does the return on assets (ROA) measure?

D) The company's ability to generate profit with shareholders' investments Signup and view all the answers

Master Financial Ratios

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Questions and Answers

Which of the following statements is true about a current ratio of 2 to 1 for a company in any industry?

What is a banker or trade creditor most concerned about when evaluating a firm?

How do asset utilization ratios relate balance sheet assets to income statement sales?

What do debt utilization ratios indicate about the strength of a firm?

What does the debt-to-equity ratio measure?

Which one of the following statements is true about a current ratio of 2 to 1 for a company in any industry?

What is the purpose of asset utilization ratios?

What do debt utilization ratios indicate about the strength of a firm?

Which of the following statements is true about the debt-to-equity ratio?

What does the return on assets (ROA) measure?

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