Which of the following is true about the quick ratio? It is a liquidity ratio. O It measures the ability of the firm to pay off its short-term obligations without relying on inventory. It cannot exceed the current ratio. OIt is also called the acid-test ratio.

Q: Which Inventory Valuation method gives the highest profit when inventory costs are rising? a.…

A: The inventory can be valued using various methods as FIFO, LIFO and average method. Using FIFO, the…

Q: The two main approaches to equity analysis are the relative valuation models and…

A: Equity valuation is used by analysts to evaluate or analyze a company or a group of companies by…

Q: A positive price-to-book ratio indicates something is wrong with a company's use of its assets. True…

A: In the world of finance and investing, numerous metrics and ratios are utilized to evaluate the…

Q: Which statement is least indicates the benefit of leverage ratio O a. The ability to borrow money O…

A: This statement actually indicates a potential benefit of leverage. A higher leverage ratio can…

Q: The margin of safety can be defined as the amount by which sales can decrease before losses are…

A: Total sales of a company can be divided into Margin of safety sales and break even sales.

Q: How do you measure gross margin return on inventory(GMROI)?

A: GMROI is a measure of inventory profitability where, it measures how much profit does the sales…

Q: Define the following terms: inventory conversion period, average collection period, and payables…

A: All the transactions of the company that are happened during the year will be recorded first in the…

Q: Which ratio would a company most likely use to measure its ability to meet short-termobligations?B .…

A: The current ratio is a liquidity ratio that measures a company's ability to pay short-term…

Q: If a company was able to reduce its inventory level while keeping other things constant, we will see…

A: The ability of an individual, organization, or financial instrument to satisfy its short-term…

Q: Which of the following financial ratios is not a measure of operating profitablitlity? Return on…

A: Formula: Return on Assets = Net income / Total Assets.

Q: True and False questions - Indicate True or False 1. A negative net present value is acceptable.…

A: 1) Net present value is present value of cash inflow less present value of cash outflow. When…

Q: Liquidity

A: A firm’s liquidity position plays a very important role in ensuring its survival in the market.

Q: Explain whether the following situations, taken independently, would be favorable or unfavorable: (…

A: Favorable is the condition that is positive for a business. This implies that the variance or the…

Q: Explain why companies do not include principle payment requirement when calculating earnings to…

A:

Q: 1 The use of alternative accounting methods will result in a lower price-earnings ratio. A: True B:…

A: Accounting methods:- An accounting methods are defined as those methods, which can be adopted by…

Q: Inventory Turnover Ratio shows the speed at which the Sales will be converted into cash. Select one:…

A: The ratio analysis helps to analyse the financial statements of the business.

Q: For each of the following situations, indicate whether FIFO, LIFO, or weighted average applies: a.…

A: The inventory can be valued using various methods as FIFO, LIFO and average method. FIFO stands for…

Q: In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory…

A: Inventory turnover ratio:Inventory turnover ratio is used to determine the number of times inventory…

Q: ending inventory increases therefore net income under AC and VC will be same Select one: True False

A: The income statement can be prepared using various approaches as contribution margin or absorption…

Q: Under the lower of cost or market inventory valuation rule, market value of inventory is defined as:…

A: Market value is the price of an item/product prevailing in the market on the given date.

Q: what is the impact on operating cash flows (increase or decrease) for changes in inventory levels…

A: Change in current asset inversely affect the operating cash flow section of the statement of cash…

Q: What types of liabilities, assets, and equity are not assumed to vary directly with sales

A: Solution:- The following types of assets, liabilities, and equity are assumed to vary directly with…

Q: If one firm is growing rapidly and another is not, how might this distort a comparisonof their…

A: It is a financial measure that is used to evaluate as to how many times a company sells or uses its…

Q: Suppose Fine Chocolates Co. estimates bad debt under the aging method. Before adjusting entries at…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The degree of operating leverage (DOL) is interpreted as the ratio of the percentage change in net…

A:

Q: 1. Inventory management aims at a. increase customer service levels b. All of the above c.…

A: Inventory management refers to the process of ordering, storing and using a company's inventory.

Q: Suppose that on its historical Income Statements, a firm always split its total depreciation and…

A:

Q: which of the following ratios would a supplier most likely monitor to assess the ability of a…

A: Ratio analysis is a method to know the liquidity, profitability and operational efficiency of the…

Q: Which of the following is true regarding LIFO and FIFO? A) In a period of decreasing costs, LIFO…

A: First in first out is also written as FIFO and last in first out is also written as LIFO. These are…

Q: Which of the following statements is not correct? Group of answer choices A)Purchasing fixed assets…

A: A)Purchasing fixed assets using cash decreases the current ratio. Purchasing fixed asset using cash…

Q: Which of the following statements is true? OA. When a large proportion of income is spent on a…

A: To find: which of the following statement is true

Q: Which of the following statements is true?

A: Companies tries to use the methods of the inventory valuation so that the tax liability of the…

Q: What effect does collection policy have on sales, collection time, and bad-debt loss percentage

A: The company's collection policy is defined as the strategies or processes it employs to collect past…

Q: What does a very high inventory turnover ratio signify? Please provide your own example to explain…

A: Inventory turnover ratio is one of the efficiency ratio, which says and calculates how many times…

Q: Explain the purpose of the inventory turnover ratio? Is it possible for a firm to have a high…

A: In finance we make use of various financial ratios to determine the financial health of a company.…

Q: nover ratio

A: Higher turnover rates imply higher fund expenditures, which might lower the fund's actual quality.…

Q: Two of the efi ciency ratios mentioned in the chapter are the receivable turnover ratio and the…

A: Receivable turnover ratio refers to the number of times, a company collects money from its customers…

Q: In comparing the current ratios of two companies, why is it invalid to assume that the company with…

A: Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt…

Q: The appropriate benchmark for the return on equity is: A)the weighted average cost of capital.…

A: Total earning of the firm that is held in the hands of shareholders of the company.

Q: Gross profit margin is a better measure of profitability than return on equity (ROE).  Select one:…

A: Gross profit margin is the ratio of gross profit divided by the sales revenue. Return on equity is…

Q: Choose Current ratio Asset turnover ratio Inventory turnover ratio Receivables turnover ratio

A: Liquidity ratios: Liquidity ratios measure the short-term capacity of a company to pay its maturing…

Q: Financial leverage indicates -

A: Financial Leverage: It is the use of debt capital for purchasing more assets. The company takes…

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.