Test #2 Review

A current ratio of 2:1 means that an event business has $2 of current liabilities to $1 of current assets

• True

• False

Working capital is an indicator of whether a company has enough liquid assets to pay off its upcoming debts. A

• True

• False

What is the formula for the current ratio?

• Current assets/cash

• Current liabilities/current assets

• Current assets/current liabilities

• Fixed Assets/current liabilities

What account is not included in the quick ratio calculation?

• Cash

• Inventory

• Accounts Receivables

• Marketable Securities

Gross Profit/Net Sales =

• Net Profit Margin

• What the finance

• Current Ratio

• Gross Profit Margin

An increase to debt with no change to equity will mean the debt-to-equity ratio will increase.

• True

• False

When completing a vertical analysis of an income statement, net income = 100%

• True

• False

1:1 is the benchmark for the current ratio?

• True

• False

If current assets = $10,000 and current liabilities = $20,000 the current ratio is:

• 2:1

• 1:0.5

• 0.5:1

• 1.05:1