pared, inflation should be taken into consideration c. Return on total assets (ROA) is sometimes called return on investment d. Generally, inventory is concerned with the most liquid asset that a firm possesses. e. A P/E ratio of 20 indicates that investors are willing to pay $20 for each $1 of earnings.
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Which of the following statements are false? Select all that apply
a.
Liquidity ratios are used to measure the speed with which various accounts are converted into sales.
When ratios of different years are being compared, inflation should be taken into consideration
Generally, inventory is concerned with the most liquid asset that a firm possesses.
A P/E ratio of 20 indicates that investors are willing to pay $20 for each $1 of earnings.
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