Which of the following is true about the quick ratio? a. The quick ratio is calculated by dividing the least liquid of current assets by current liabilities. b. Quick ratios will tend to be much larger than current ratio for manufacturing firms or other industries that have a lot of inventory. c. Inventory, being not very liquid, is subtracted from total current assets to determine the most liquid assets. d. Service firms that tend not to carry too much inventory will see significantly higher quick ratios than current ratios.

Q: What does a high ratio in Creditors Turnover Ratio indicate? a. Company is delaying the payment to…

A: Creditors Turnover Ratio measures how fast a company is paying off its creditors.

Q: Many financial analysts substitute one amount for another in making ratioanalysis comparisons in…

A: Financial accounting: Financial accounting is the process of recording, summarizing, and reporting…

Q: Profit margins and turnover ratios vary from one industry to another. Whatdifferences would you…

A: Profit margin is a measure of company’s earnings relative to its revenue. In simple terms, it is the…

Q: In comparing the current ratios of two companies, why is it invalid to assume that the company with…

A: Solution: Current ratio is calculated as = Current assets / Current liabilities Current assets…

Q: Why is the quick ratio considered by some to be a better measure of liquidity than the current…

A: The quick ratio examines a company's short-term liquidity position and assesses its ability to meet…

Q: Which of the following statements is most correct?

A: Current Ratio: It is a measure of liquidity and the capability of a firm to pay its short-term…

Q: Like many technology companies, TechnoTools operates in an environment of decliningprices. Its…

A: The last in, first-out (LIFO) is a system utilized to store reports of the latest items first…

Q: Explain what the significance of having a high/low Price-to-Book ratio means about the company's

A: Price/Book value is ratio of stock price in actual market and book value is value of share as books…

Q: From a financial management perspective, when would it make sense to (a) invest in additional…

A: The company's aim will be to increase the profitability of the company. The profits can be arrived…

Q: If one firm is growing rapidly and another is not, how might this distort a comparisonof their…

A: It is a financial measure that is used to evaluate as to how many times a company sells or uses its…

Q: Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial…

A: Financial Intermediation Services Indirectly Measured (FISIM) In general, only a small part of…

Q: For each of the following cases, state whether the statement is true for LIFO or for FIFO. Assume…

A: when inventory costs are rising, LIFO uses most recent purchases, which increases cost of good sold,…

Q: Company X is competing with company Y. These are their ratios: x y Current Ratio = .223 Current…

A: Current Ratio It is an accounting ratio which measures the company's ability to pay short term debt…

Q: Which of the following statements is most correct?(a) Generally, firms with high profit margins have…

A: STEP 1 Every entity should always have adequate assets deployed so that it will smoothly maintain…

Q: 1. Which one of the following is not a characteristic generally evaluated in analyzing financial…

A: 1. Correct option is D i.e. Marketability Because financial statements can be used to analyses the…

Q: Which of the following statements about the quality of earnings ratio is true? Multiple Choice…

A: Lets understand the basics. Quality of earning ratio indicates the cashflow from operating activity…

Q: Show with a formula that describes the average estimatesustainable sales growth. Then, make a clear…

A: Sustainable growth means Growth for the future customers such as petroleum industries advertise…

Q: Which of the following provides the best description of the liquidity ratios? Current ratio is the…

A: Solution:- Liquidity ratio measures the liquidity of a firm, i.e. how efficiently a firm is able to…

Q: when comparing a firm's ratios to an industry, is it bad to he below average? explain your answer…

A: In finance we often use financial ratios to determine and evaluate the financial health and position…

Q: Which of the following would increase risk?   a. Raise the level of working capital b. Increase the…

A: The working capital is the funds it needs to carry out day-to-day operations like cash, accounts…

Q: Identify which of the statements below are true (T) or false (F). Lean businesses aim to: Reduce…

A: Lean businesses aim to: Reduce inventory levels--true

Q: If a firm sold some inventory on credit, its current ratio would probably not change much, but its…

A: Current ratio is defined as the liquidity ratio, which used to measure an ability of the company for…

Q: Which of the following statements is true?

A: Companies tries to use the methods of the inventory valuation so that the tax liability of the…

Q: Discuss the economic characteristics of firms that have the following mix of profit margin and asset…

A: Introduction: The net asset turnover is inversely proportional to the profit margin. it means higher…

Q: The main ratio used by many financial analysts to examine a company's short-term liquidity risk is…

A: One of the important functions of a financial manager is to continue monitoring and evaluating the…

Q: Which of the following statements about the current ratio is FALSE?   A. The higher the current…

A: Current ratio indicates the short-run liquidity position of the firm and is the ability of a firm to…

Q: In general, it's better to have a low inventory turnover ratio than a high one, as a low ratio…

A: The financial ratios refer to the ratios that are calculated using the financial data from the…

Q: Which asset liability combination would result in the firm having the highest risk of insolvency? A.…

A: SOLUTION INSOLVENCY MEANS WHEN AN INDIVIDUAL OR COMPANY CAN NO LONGER MEET THEIR FINANCIAL…

Q: Why is the acid test ratio a more rigorous test of short-term solvency than the current ratio? A.…

A: The ratio refers to the establishment of a relation between the two numbers. In accounting, the…

Q: In comparing the current ratios of two companies, why is it invalid to assume that the company with…

A: Current ratio: The financial ratio which evaluates the ability of a company to pay off the debt…

Q: Which one of the following is an advantage of LIFO? a. In periods of rising prices, less income…

A: >> LIFO Method means Last in first out i.e latest purchase is sold first. >> In rising…

Q: A firm's market-to-book ratio might be greater than 1.0 due to accounting reasons. An example of an…

A: Please find the answer to the above question below:

Q: If either of the liquidity ratios is less than that of the industry as a whole, does that mean that…

A: Following are the liquidity ratios:

Q: Indicate the effects of the transactions listed, on current assets, current ratios and net income.…

A: Debit what comes in, Credit what goes out. Debit the receiver, Credit the giver. Debit all expenses…

Q: Which of the following statements is incorrect? O If the current ratio is too high the company may…

A:

Q: What does the inventory turnover period ratio measure? Select one: a.Profitability. b.The average…

A: INVENTORY TURNOVER PERIOD RATIO IS A FINANCIAL RATIO SHOWING HOW MANY TIMES AN ORGANISATION HAS SOLD…

Q: which of the following is considered a signal of success for a manufacturing company? A) A low quick…

A: The inventory turnover ratio measures the effectiveness of a company’s manufacturing process. This…

Q: When evaluating a company's liquidity, O a. The quick ratio is typically more conservative than the…

A: Company's liquidity: The capacity of a corporation to raise funds when it is in need is referred to…

Q: A firm that uses LIFO accounting for inventory in times of rising investory costs will always report…

A: FIFO First in first out method is a method of inventory accounting wherein the units of goods…

Q: answer these question in just two sentences. a..“If a firm sold some inventory on credit, its…

A: The financial ratios refer to the ratios that are calculated using the financial data from the…