Liquidity and Efficiency: A company paying off its short term obligations from its liquid assets or short term assets available to them is known as liquidity of a company. On the other hand efficiency is the ability to quickly and economically convert an input into output. Solvency: Ability of an enterprise to meet its long term obligations or commitments is known as solvency of a company. Profitability: Profitability is the proficiency of a business to earn profit in other words overall performance of a company to earn. Market Prospects: Market prospects are a company’s future potential performance in the marketplace. To identify: Match the ratio to building block of financial statement analysis to which it best relates.

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Chapter 13, Problem 1E

To determine

Liquidity and Efficiency:

A company paying off its short term obligations from its liquid assets or short term assets available to them is known as liquidity of a company. On the other hand efficiency is the ability to quickly and economically convert an input into output.

Solvency:

Ability of an enterprise to meet its long term obligations or commitments is known as solvency of a company.

Profitability:

Profitability is the proficiency of a business to earn profit in other words overall performance of a company to earn.

Market Prospects:

Market prospects are a company’s future potential performance in the marketplace.

To identify: Match the ratio to building block of financial statement analysis to which it best relates.

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