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

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 16, 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

Provide correct answer this financial accounting

General Accounting

CONCORD CORPORATION Balance Sheet December 31, 2024 Cash Accounts receivable $56,580 Accounts payable $58,880 Common stock ($10 104,650 184,000 par) Allowance for doubtful accounts (3.450) Retained earnings 293,020 Supplies 10.120 Land 92,000 Buildings 326,600 Accumulated depreciation-buildings (50,600) $535,900 $535,900 During 2025, the following transactions occurred. 1. On January 1. Concord issued 2,760 shares of $40 par. 7% preferred stock for $113,160. 2. On January 1, Concord also issued 2,070 shares of the $10 par value common stock for $48,300. 3. Concord performed services for $736,000 on account. 4. On April 1, 2025, Concord collected fees of $82,800 in advance for services to be performed from April 1, 2025, to Mar 31, 2026. 5. Concord collected $634,800 from customers on account. 6. Concord bought $80,730 of supplies on account. 7. Concord paid $74,060 on accounts payable. 8. Concord reacquired 920 shares of its common stock on June 1 for $28 per share. 9. Paid other…

Answer 2

Question

Chapter 16, 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 16, 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 16, 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 16, 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 16, 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 16, 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.