Podcast
Questions and Answers
Which financial statement is used to calculate financial ratios?
Which financial statement is used to calculate financial ratios?
- Income statement
- Statement of changes in equity
- Balance sheet (correct)
- Statement of cash flows
Who may use financial ratios to evaluate the overall financial condition of a corporation or organization?
Who may use financial ratios to evaluate the overall financial condition of a corporation or organization?
- Managers within a firm
- Current and potential shareholders
- A firm's creditors
- All of the above (correct)
How are financial ratios usually expressed?
How are financial ratios usually expressed?
- As a decimal value
- Both as a decimal value and an equivalent percent value (correct)
- As a whole number
- As an equivalent percent value
Which type of ratio measures the availability of cash to pay debt?
Which type of ratio measures the availability of cash to pay debt?
Which type of ratio measures how quickly a firm converts non-cash assets to cash assets?
Which type of ratio measures how quickly a firm converts non-cash assets to cash assets?
Which type of ratio measures the firm's ability to repay long-term debt?
Which type of ratio measures the firm's ability to repay long-term debt?
Which type of ratio measures the firm's use of its assets and control of its expenses to generate an acceptable rate of return?
Which type of ratio measures the firm's use of its assets and control of its expenses to generate an acceptable rate of return?
Which ratio measures the availability of cash to pay debt?
Which ratio measures the availability of cash to pay debt?
Which ratio measures the effectiveness of the firm's use of resources?
Which ratio measures the effectiveness of the firm's use of resources?
Which ratio quantifies the firm's ability to repay long-term debt?
Which ratio quantifies the firm's ability to repay long-term debt?
Which ratio measures investor response to owning a company's stock?
Which ratio measures investor response to owning a company's stock?
Flashcards are hidden until you start studying
Study Notes
Financial Ratios
- Financial ratios are calculated using financial statements.
- Financial ratios are used by various stakeholders, including investors, creditors, and management, to evaluate the overall financial condition of a corporation or organization.
Types of Financial Ratios
- Liquidity ratios measure the availability of cash to pay debt.
- Asset utilization ratios measure how quickly a firm converts non-cash assets to cash assets.
- Solvency ratios measure the firm's ability to repay long-term debt.
- Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return.
- Cash flow ratios measure the availability of cash to pay debt.
- Efficiency ratios measure the effectiveness of the firm's use of resources.
- Solvency ratios quantify the firm's ability to repay long-term debt.
- Market ratios measure investor response to owning a company's stock.
Ratio Expressions
- Financial ratios are usually expressed as a decimal value or a percentage.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
