6) To best measure the liquidity of a business:A) calculate the leverage ratioB) calculate the working capitalC) calculate the current ratioD) calculate both the working capital and current ratio

Option a: This option is incorrect because the leverage ratio is the financial ratio that helps to…

Answered: 6) To best measure the liquidity of a…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter24: Analysis Of Financial Statements

Section: Chapter Questions

Problem 2MC

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Similar questions

Using the following Balance Sheet summary information, calculate for the two companies presented: A. working capital B. current ratio Then: A. evaluate which companys liquidity position appears stronger, and why.
None
What does the current ratio measure? a) Liquidity b) Profitability c) Leverage d) Cash Flow
A. Which of the following is most closely associated with the cost of using assets? a. Asset utilization b. Sales revenue c. Proportion of debt and equity d. Average price B. Which of the following is most closely associated with the return on management’s use of assets? a. Cost of capital b. Mix of equity types c. Prime lending rate d. # of products sold
Exp
1. Which of the following is referred to as the Accounting Equation? Assets Liabilities + Equity Equity Liabilities + Assets Liabilities Assets + Equity Assets = Liabilities - Equity = 2. Which of the following make up the Finance Equation? (select all that apply) Revenues = Price x Volume Costs = Fixed + Variable Profit Revenues-Costs Income Sales - COGS
Define each of the following terms: a. Liquid asset b. Liquidity ratios: current ratio; quick ratio c. Asset management ratios: inventory turnover ratio d. Debt management ratios: total debt to total capital; times-interest-earned (TIE) ratio e. Profitability ratios: profit margin; return on total assets (ROA); return on common equity (ROE); return on invested capital (ROIC); basic earning power (BEP) ratio f. Market value ratios: price/earnings (P/E) ratio; market/book (M/B) ratio; enterprise value/EBITDA ratio
6) ratios compare current assets to current liabilities to indicate the speed with which a company can turn its assets into cash to meet debts as they fall due. A) Debt B) Current C) Liquidity D) Asset utilization E) Profitability
Calculate the following ratios: 1. Return on Capital Employed (ROCE) 2. Current Ratio 3. Gearing Ratio 4. Price/Earnings (P/E) Ratio
Computing liquidity, working captial and current ratio. Computing measures of profitability, profit margin, asset turnover, return on assets, debt to equity ratio, and return on equity
Financial Accounting MCQ
Which of the following statements is correct? Select one: A. Working capital is the initial capital injected into a company. OB. Working capital is equal to the net investment in current assets and current liabilities. C. Working capital is the minimum amount of capital required to run a business. OD. Working capital is a source of long-term finance.

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6) To best measure the liquidity of a business: A) calculate the leverage ratio B) calculate the working capital C) calculate the current ratio D) calculate both the working capital and current ratio