Practice Summary - 19.6 | 19. Financial Statement Analysis – Ratio Analysis | Management 1 (Organizational Behaviour/Finance & Accounting)
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Practice Questions

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Question 1

Easy

What do liquidity ratios measure?

💡 Hint: Think about obligations due soon.

Question 2

Easy

Define profitability ratios.

💡 Hint: Consider profit in relation to sales.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What do liquidity ratios assess?

  • Long-term obligations
  • Ability to meet short-term obligations
  • Profitability

💡 Hint: Consider what obligations need to be met soon.

Question 2

True or False: Higher profitability ratios indicate a less efficient company.

  • True
  • False

💡 Hint: Think about what profit relative to sales indicates about efficiency.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company has a current asset of $500,000 and current liabilities of $300,000. Another company in the same industry has a current asset of $200,000 and current liabilities of $100,000. Which company is in a better liquidity position? Explain your reasoning.

💡 Hint: Use the current ratio formula to calculate.

Question 2

If a company's total debt is $600,000 and its equity is $400,000, what is its debt-to-equity ratio? Discuss the implications of this ratio in terms of financial risk.

💡 Hint: Think about how debt influences overall company financial stability.

Challenge and get performance evaluation