FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Computing liquidity, working captial and
Computing measures of profitability, profit margin, asset turnover, return on assets, debt to equity ratio, and return on equity
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- A ratio that measures a company’s profitability is thea. leverage ratio.b. gross margin percentage.c. current ratio.d. times-interest-earned ratio.arrow_forwardDescribe two Liquidity Ratios and explain how they are used to measure a company's performance and who is likely to use these measures.arrow_forwardWhich of the following ratios best measures the profitability of a company? a) Return on equity b) Gross margin c) Current ratio d) Net operating asset turnoverarrow_forward
- Business ratios of financial statements are generally categorized as one of the following areas, EXCEPT Select one: a. Leverage b. Profitability c. Net Present Value d. Liquidity e. Efficiency (or Activity)arrow_forwardPresent formulas and examples of the following financial ratios (Financial ratios)a. gross marginb. profit margin on salesc. return on equity (ROE)arrow_forwardDefine liquidity ratios.arrow_forward
- How to calculate working capital, current assests, current liabilities, quick assets, quick ratio and current ratio.arrow_forwardThe return on total assets measures A. profitability by combining the effects of the profit margin and asset turnover. B.how efficiently a company uses its assets to generate sales. C.efficiency, profitability, and liquidity. D.liquidity.arrow_forwardDiscuss the impact of the following ratios and usefulness to users of financial statements. Gross profit Margin Return on capital employed Operating profit (PBIT) percentage Asset turnover Gearing ratioarrow_forward
- Which of the following ratios is used to analyze a company's liquidity? a. Inventory turnover ratio b. Earnings per share c. Return on assets ratio d. Asset turnover ratioarrow_forwardexplain the impact on financial statement using FIFO, weighted avverage and LIFO. When would the three methods give similar profit figures? when would they give indentical profit figure?arrow_forwardUsing the information from 27A prepare the following ratios: gross profit margin profit margin return on assets earnings per share current ratio acid test ratio debt ratio Indicate what each is used for (ie: measuring efficiency, solvency etc)arrow_forward
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