Financial Ratios - usage

Front

What do liquidity ratios help us understand about a company?

Back

Short-term solvency

Front

Which of the following is a common liquidity ratio?
Debt-to-equity ratio,
Current ratio,
Return on equity,
Inventory turnover

Back

Current ratio

Front

Back

Front

What does a high solvency ratio indicate?

Back

Strong long-term financial stability

Front

Which ratio measures a company's earning efficiency? Options: Liquidity ratio, Solvency ratio, Profitability ratio, Efficiency ratio

Back

Profitability ratio

Front

What is the formula for calculating the return on equity (ROE)?

Back

Front

Why are efficiency ratios important?

Back

They evaluate operational performance.

Front

Which of the following is an example of an efficiency ratio? Current ratio, Debt-to-equity ratio, Return on assets, Inventory turnover

Back

Inventory turnover

Front

What is the purpose of comparing financial ratios?

Back

To evaluate a company's financial health

Front

Which ratio would you use to compare a company's ability to pay off its short-term debts?

Back

Current ratio