Determine the differences between liquidity, solvency, and profitability ratios.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

Conclusion

Thus, above are the differences between liquidity, solvency, and profitability ratios.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Delta's inventory records for February reflect the following details: On February 1, the beginning inventory consisted of 250 units priced at $3.20 each. On February 9, Delta made its first purchase of 350 units at a cost of $3.50 each. A second purchase was made on February 18, consisting of 500 units priced at $3.70 each. By the end of the month, on February 28, Delta sold 700 units at a price of $6.50 per unit. Using the FIFO (First-In, First-Out) cost flow method, what is the cost of goods sold (COGS) for February?

Please explain the solution to this general accounting problem with accurate principles.

Please explain how to solve this financial accounting question with valid financial principles.

Answer 2

Question

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

Conclusion

Thus, above are the differences between liquidity, solvency, and profitability ratios.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

Conclusion

Thus, above are the differences between liquidity, solvency, and profitability ratios.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

Conclusion

Thus, above are the differences between liquidity, solvency, and profitability ratios.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

Conclusion

Thus, above are the differences between liquidity, solvency, and profitability ratios.

Answer 6

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

Conclusion

Thus, above are the differences between liquidity, solvency, and profitability ratios.

Answer 7

Chapter 14, Problem 1DQ

To determine

Determine the differences between liquidity, solvency, and profitability ratios.

Answer 8

Expert Solution & Answer

Explanation of Solution

Financial Ratios: Financial ratios are the metrics used to evaluate the capabilities, profitability, and overall performance of a company.

In general, as said above, financial ratios are mainly used for evaluation of the liquidity, capabilities, profitability, and overall performance of a company.

Thus, following are the financial ratios and its measure:

Liquidity ratio: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term. Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.
Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.
Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.