Why is Quick Ratio deemed a better measure than the two other measures? Explain:

Q: How are the ratios useful?

A: Answer: Ratio analysis is allowing a comparison two firm’s annual financial statement using certain…

Q: How do the Internal-Rate-of-Return Criterion relate to the PW Analysis?

A: Capital budgeting:   It is the process in which the business uses to determine which proposed fixed…

Q: Define the term Current ratio with example.

A: Ratio analysis: It is the financial analysis tool for measuring the profitability, liquidity,…

Q: Why is partitioning an internal rate of return important?

A: Introduction: There are two cash flow components which can form the portioning of internal rate of…

Q: Explain positively correlated

A: Positive correlation: It's a connection between two factors that move the two factors pair — that…

Q: What are solvency ratios and what do they measure?

A: Solvency ratios of the company indicates that whether cash flows of the company are sufficient to…

Q: What is the Decreasing Returns to Scale? Can you please explain and give a definition, thank you.

A: The concept of decreasing return to scale is majorly used in production process and production…

Q: Which is more meaningful, a single ratio data point or the trend shown by several ratio data points?

A: Ratio analysis is the study of several financial data points found in the financial statements of an…

Q: What is the difference between I and G spread measures?

A: The yield spread of the bond reflects the difference between the YTM(Yield to Maturity) of various…

Q: What is discounting and compounding? What is the difference between them?

A: We need to use the equation of time value of money to explain the concept of discounting and…

Q: What is meant by partitioning the internal rate of return? Why is this procedure meaningful?

A: Internal rate of return is defined as the annual rate of earnings on an investment and unlike income…

Q: List several potential problems with ratio analysis.

A: Ratio analysis is a correlation of details in an organization's financial reports. It is utilized to…

Q: Explain quick ratio

A: The formula to compute quick ratio as follows:

Q: What is Altman's Z-score and what does it tell you?

A: The Altman Z Score is utilized to forecast the probability that a business will go bankrupt inside…

Q: Explain four aspects of rate-of-return analysis?

A: The return of return is the return on investment made when the time value cashflows turns to net…

Q: coefficient of correlation is used to obtain what?

A: The correlation coefficient could be a measurable degree of the quality of the connection between…

Q: Give an example of a Sensitivity Analysis performed for Mutually Exclusive Alternatives?

A: Mutually exclusive alternatives are those alternatives out of which only one can be selected at a…

Q: What is the difference between probability and statistics?

A: The problems considered by probability and statistics are inverse to each other. In probability…

Q: Describe the Incremental B/C-Ratio Analysis?

A: Benefit cost analysis: Benefit cost analysis refers to analyzing the desirability of project where…