Financial Ratios

Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.

• liquidity ratios
• efficiency ratios
• leverage ratios
• profitability ratios

Financial ratios that tell how much of each rand of sales, assets, and owner's equity resulted in net profit.

• liquidity ratios

• efficiency ratios

• profitability ratios

• leverage ratios

The difference between current assets and current liabilities at a point in time. The amount of money that would be left over if all the current liabilities were paid off by current assets. 

• current ratio
• working capital
• acid test/ quick ratio
• asset turnover ratio

The comparison of a firm's current assets to current liabilities. The ratio indicates the amount of current assets available to pay off R1 of current debt.

• acid test/ quick ratio

• asset turnover ratio

• current ratio

• inventory turnover

Indicates a firm's ability to quickly liquidate assets to pay off current debts.

• asset turnover ratio
• inventory turnover
• debt-to-assets ratio
• acid test/ quick ratio

The amount of profit generated by the firm in relation to the amount invested by the owners.

• return on investment
• ratio
• working capital
• inventory turnover

The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the: 

• Balance Sheet
• Statement of Retained Earnings
• Statement of Cash Flows
• Income Statement

If total expenses exceed total revenue, a net loss is reported

• True
• False

Examples may include salaries, utilities, rent, insurance, and office supplies.

• Revenue

• Expenses

• Net Income

• Net Loss

This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners o the company are entitled to.

• Income Statement
• Balance Sheet