Quiz on Ratio Analysis (May 5-8, 2025)

It’s a tool that measures a company’s ability to meet its short-term obligations using its current assets.

• liquidity

• asset management

• solvency

• profitability

It’s a tool that assesses a company’s long-term financial stability and its ability to meet long-term debt obligations.

• liquidity

• asset management

• solvency

• profitability

The excess of current assets over current liabilities is called:

• current ratio

• working capital

• quick acid test ratio

• liquidity

This measures the elapsed time from when inventory is received from suppliers to when cash is received from customers.

• receivable turnover

• inventory turnover

• times interest earned

• Operating cycle

Which of the following is the most of interest to a firm’s suppliers?

• profitability

• asset utilization

• debt

• liquidity

A measure of a company’s immediate short-term liquidity is the

• current ratio.

• current cash debt coverage ratio.

• cash debt coverage ratio.

• acid-test ratio.

A measure of how efficiently a company uses its assets to generate sales is the

• asset turnover ratio.

• profit margin ratio.

• cash return on sales ratio.

• return on assets ratio.

The debt ratio indicates:

• a comparison of liabilities with total assets

• the ability of the firm to pay its current obligations

• the efficiency of the use of total assets

• the magnification of earnings caused by leverage

A times interest earned ratio of 0.90 to 1 means that

• the firm will default on its interest payment

• net income is less than the interest expense

• the cash flow is less than the net income

• the cash flow exceeds the net income

Stockholders are most interested in evaluating

• liquidity.

• profitability.

• solvency.

• marketability.