If a firm’s current ratio less quick ratio is 1.0, then: a. the firm’s inventory is equal to its current assets b. the firm’s cash is equal to its current liabilities c. the firm’s accounts receivable are equal to its current assets d. the firm’s inventory is equal to its current liabilities

Formulas for the calculations of current ratio and quick ratio are as follows:- Current ratio =…

Answered: If a firm’s current ratio less quick…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 27MCQ

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A. What is the company’s gross profit margin?B. What is the company’s inventory turnover?C. What is the company’s current ratio?D. What is the company’s return on asset?E. What is the company’s net profit margin? F. What is the company’s days receivable?G. What is the company’s quick ratio?
If a company has a quick ratio of 1.0 and a current ratio of 2.0, it is more likely that A. the value of current liabilities is equal to the value of inventory. B. the value of current assets is equal to the value of inventory. C. the value of current assets is equal to the value of current liabilities. D. the value of current liabilities is more than the value of current assets.
An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? A . Th is ratio is an interest coverage ratio, measuring a company’s ability to meet its interest obligations and indicating a company’s solvency.
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Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test, ratio Asset management ratios: inventory turnover ratio; days sales outstanding (DSO); fixed assets turnover ratio; total assets turnover ratio Financial leverage ratios: debt ratio; times-interest-earned (TIE) ratio; EBITDA coverage ratio Profitability ratios: profit margin on sales; basic earning power (BEP) ratio; return on total assets (ROA); return on common equity (ROE) Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per share Trend analysis; comparative ratio analysis; benchmarking DuPont equation; window dressing; seasonal effects on ratios
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Select the Income Statements and Balance Sheets of Aramco Saudi from the calculate the following financial ratios: a. Long-term debt ratios b. Total debt ratio c. Times interest earned d. Cash coverage ration e. current ratio f. Quick ratio g. Operating profit margin h. Inventory Turnover i. Days in inventory j. Average collection period k. Return on equity I. Return on assets m. Payout rations

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		a. the firm’s inventory is equal to its current assets
		b. the firm’s cash is equal to its current liabilities
		c. the firm’s accounts receivable are equal to its current assets
		d. the firm’s inventory is equal to its current liabilities