Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 14, Problem 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).

Conclusion

Hence, the correct answer is Option c. Debt ratio.

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

General Accounting

I won't to this question answer general Accounting not use ai

Financial accounting

Answer 2

Question

Chapter 14, Problem 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).

Conclusion

Hence, the correct answer is Option c. Debt ratio.

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 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).

Conclusion

Hence, the correct answer is Option c. Debt ratio.

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 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).

Conclusion

Hence, the correct answer is Option c. Debt ratio.

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 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).

Conclusion

Hence, the correct answer is Option c. Debt ratio.

Answer 6

Chapter 14, Problem 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).

Conclusion

Hence, the correct answer is Option c. Debt ratio.

Answer 7

Chapter 14, Problem 1STQ

To determine

Identify which of the stated ratio or item that is least important as a measure of short-term liquidity.

Answer 8

Expert Solution & Answer

Answer to Problem 1STQ

c. Debt ratio.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option a. Quick ratio: The liquidity ratio which evaluates the ability of a company to pay off the instant debt obligations is referred to as quick ratio. Quick assets are cash, marketable securities, and accounts receivables.

Option b. Current ratio: Current ratio is one of the liquidity ratios, which measures the capacity of the company to meet its short-term obligations using its current assets

Option c. Debt ratio: The debt ratio shows the relationship between total asset and the total liability of the company. Debt ratio reflects the financial strategy of the company. It is used to measure the percentage of company’s assets that are financed by long term debts.

Option d. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Cash flows from operating activities are reported in the statement of cash flows to ascertain the amount of cash inflows and outflows from operating activities during the year. Hence, it is not a measure of short term liquidity.

From the above explanation, Options (a), (b) and (c) are incorrect answers. Thus, the correct answer is Option (c).