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Questions and Answers
What is the formula for calculating the Current Ratio?
What is the formula for calculating the Current Ratio?
- Total Assets / Total Liabilities
- Total Liabilities / Total Assets
- Current Liabilities / Current Assets
- Current Assets / Current Liabilities (correct)
What is the formula for calculating the Acid Test Ratio?
What is the formula for calculating the Acid Test Ratio?
- Current Assets / (Current Liabilities - Inventory)
- (Current Assets + Inventory) / Current Liabilities
- (Current Assets - Inventory) / Current Liabilities (correct)
- Current Assets / Current Liabilities
What is the leverage effect?
What is the leverage effect?
- The use of equity to increase the return on investment
- The use of borrowed money to increase the return on investment (correct)
- The use of retained earnings to increase the return on investment
- The use of both debt and equity to increase the return on investment
What is the main advantage of equity capital over debt capital?
What is the main advantage of equity capital over debt capital?
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What is the Payback Period?
What is the Payback Period?
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What is the Payback Period of a project?
What is the Payback Period of a project?
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