
1.
Introduction: The
The solvency ratios suggest the long-term solvency position of the business taking into consideration the capital structure in which the finances have been employed. The same is determined through the debt-equity ratio and times interest earned.
The profitability ratios suggest the earning capacity of the business in terms of profit margin based on sales revenue and return on total assets based on total assets of the business.
:
Ratios required to measure the operating efficiency.
2
Introduction: The liquidity ratios of the business are computed to know the short-term liquidity position of the business to know the capacity of paying the short-term liabilities. The same is computed and determined through the Current ratio and Acid-Test ratio.
The solvency ratios suggest the long-term solvency position of the business taking into consideration the capital structure in which the finances have been employed. The same is determined through the debt-equity ratio and times interest earned.
The profitability ratios suggest the earning capacity of the business in terms of profit margin based on sales revenue and return on total assets based on total assets of the business.
The term used for the difference in current assets and current liabilities.
3
Introduction: The liquidity ratios of the business are computed to know the short-term liquidity position of the business to know the capacity of paying the short-term liabilities. The same is computed and determined through the Current ratio and Acid-Test ratio.
The solvency ratios suggest the long-term solvency position of the business taking into consideration the capital structure in which the finances have been employed. The same is determined through the debt-equity ratio and times interest earned.
The profitability ratios suggest the earning capacity of the business in terms of profit margin based on sales revenue and return on total assets based on total assets of the business.
The ratios required for knowing the frequency of collection of accounts.

Want to see the full answer?
Check out a sample textbook solution
Chapter 13 Solutions
Gen Combo Ll Financial Accounting Fundamentals; Connect Access Card
- Financial Accounting Question get correct answerarrow_forwardBlake Corporation has $200,000 in accounts receivable that will be collected within 80 days. Since Blake needs cash immediately, it has decided to factor them and has received $185,000. Everest Factoring Company, which took the receivables, could collect only $195,000 after 100 days. Find the rate of return on this investment for Everest.arrow_forwardWhat is the cost of goods sold for Mayur Enterprises?arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningSurvey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning



