Financial Ratio Analysis

Define 'liquid' in the context of financial analysis.

• A state of matter with a definite volume but no fixed shape

• The ability of an asset to be quickly converted into cash without significant loss of value

• A financial term referring to the total amount of money in circulation

• A measure of the profitability of a company

In the context of financial analysis, what does the term 'assets' refer to?

• Liabilities of a company

• Resources owned by a company

• Expenses incurred by a company

• Revenue generated by a company

By the end of this topic, you should be able to calculate and interpret the gearing ratio. What factors would you consider in this calculation?

• Interest rates and tax rates

• Debt and equity levels

• Market trends and economic indicators

• Company size and industry type

Receivables Days can be calculated by:

• Dividing the accounts receivable by the total credit sales and multiplying by 365

• Multiplying the accounts receivable by the total credit sales and dividing by 365

• Dividing the total credit sales by the accounts receivable and multiplying by 365

• Multiplying the total credit sales by the accounts receivable and dividing by 365

The main purpose of financial accounting is to provide the stakeholders of a firm with information as to how the business has performed over a given period. How would your answer change if firm X was the local fish and chip shop?

• The purpose remains the same, providing performance information.

• The purpose changes to focus on daily sales.

• The purpose changes to focus on inventory management.

• The purpose changes to focus on customer satisfaction.

What figures were the firm expecting?

• The firm was expecting a 10% increase in revenue.

• The firm was expecting a 5% decrease in expenses.

• The firm was expecting a 15% growth in market share.

• The firm was expecting a 20% increase in profits.

Fill in the blank: Capital Employed = Total Equity + ______.

• Non-Current Liabilities

• Current Liabilities

• Total Assets

• Net Income

Fill in the blank: Working Capital = Current Assets – ________.

• Current Liabilities

• Fixed Assets

• Equity

• Long-term Debt

All stakeholders are interested in profitability ratios because:

• They indicate the company's ability to generate profit relative to revenue, assets, or equity.

• They provide information about the company's market share.

• They show the company's compliance with regulations.

• They reflect the company's customer satisfaction levels.

What is the Total Equity in £000?

• 399

• 200

• 500

• 150