RATIOS

What does a high return on assets ratio indicate?

• High debt levels
• Poor liquidity
• Low profitability
• Efficient asset utilization

Which ratio measures a company's ability to pay off its short-term obligations?

• Quick ratio
• Debt ratio
• Net profit margin
• Return on equity

What does a high gross profit margin indicate?

• Poor liquidity
• Efficient cost management
• High debt levels
• Low profitability

What does a low debt-to-equity ratio indicate?

• High debt levels
• Low profitability
• Low financial risk
• Inefficient asset management

Which ratio measures a company's ability to generate profit from its sales?

• Current ratio
• Return on assets
• Gross profit margin
• Debt-to-equity ratio

Which ratio measures a company's ability to meet its long-term debt obligations?

• Debt-to-equity ratio
• Gross profit margin
• Net profit margin
• Current ratio

What are the two main components of an income statement?

• Revenue and expenses
• Cash flow and investments
• Equity and retained earnings
• Assets and liabilities

What is the purpose of income statement ratios?

• To evaluate a company's solvency
• To assess a company's profitability
• To determine a company's market value
• To measure a company's liquidity

What does a high quick ratio indicate?

• High debt levels
• Low profitability
• Inefficient asset management
• Strong liquidity

Which ratio measures a company's overall profitability?

• Debt-to-equity ratio
• Return on assets
• Current ratio
• Operating profit margin