Internal Controls / Ratios

Food cost percentage is calculated by dividing food sales over food costs

• True

• False

A food cost percentage of 45% is favourable

• True

• False

Current Ratio

• Liquidity Ratio

• Solvency Ratio

• Activity Ratio

• Profitability Ratio

A current ratio of 2:1 means that a company has $2 of current assets to $1 of current liabilities

• True

• False

A company that is solvent means that:

• Liabilities exceed assets

• Gross Profit is negative

• Assets exceed Liabilities

• None of the answers are correct

If a business is financed through debt......

• Financing is from the bank

• Financing is from investors

A debt-to-equity ratio of 2 or higher is considered favorable

• True

• False