The higher the debt-to-equity ratio, the higher the potential return to the stockholders if return on assets (ROA) exceeds the after tax cost of interest. D.
Cost of goods sold 600,000 The quick ratio is closest to: A. 3.57 B. 1.67 C. 1.19 D. 1.14 D. 1.14 Quick ratio = 1.14 = Quick assets ÷ Current liabilities = $240,000 ÷ $210,000. Quick assets = Cash $80,000 + Accounts receivable $120,000 + Marketable securities $40,000.
C. The higher the debt-to-equity ratio, the higher the potential return to the stockholders if return on assets (ROA) exceeds the after tax cost of interest. D. The cash coverage ratio compares the cash generated by a company to its cash obligations for the prior period. C.
The debt-to-equity ratio shows the relative proportion of total assets financed by debt. C. The higher the debt-to-equity ratio, the higher the potential return to the stockholders if return on assets (ROA) exceeds the after tax cost of interest. D.
Most common examples of liquidity ratios include current ratio, acid test ratio (also known as quick ratio), cash ratio and working capital ratio.
Common liquidity ratios include the quick ratio, current ratio, and days sales outstanding. Liquidity ratios determine a company's ability to cover short-term obligations and cash flows, while solvency ratios are concerned with a longer-term ability to pay ongoing debts.
Acid Test Ratio or Quick Ratio This ratio is the best measure of liquidity in the company. This ratio is more conservative than the current ratio. The quick asset is computed by adjusting current assets to eliminate those assets which are not in cash.
Answer and Explanation: The correct answer is c. Debt to assets ratio. This is not a liquidity ratio but a solvency ratio.
4 Common Liquidity Ratios in AccountingCurrent Ratio. One of the few liquidity ratios is what's known as the current ratio. ... Acid-Test Ratio. The Acid-Test Ratio determines how capable a company is of paying off its short-term liabilities with assets easily convertible to cash. ... Cash Ratio. ... Operating Cash Flow Ratio.
A liquidity ratio is used to determine a company's ability to pay its short-term debt obligations. The three main liquidity ratios are the current ratio, quick ratio, and cash ratio.
Key Takeaways The quick and current ratios are liquidity ratios that help investors and analysts gauge a company's ability to meet its short-term obligations. The current ratio divides current assets by current liabilities.
-is the ratio of quick assets (generally current assets less inventory) to current liabilities. Indicates a company's ability to satisfy current liabilities with its most liquid assets. You just studied 10 terms!
three typesThe three types of liquidity ratios are the current ratio, quick ratio and cash ratio.
Answer: 1:1. Explanation: It is defined as the ratio between quickly available or liquid assets and current liabilities. Quick assets are current assets that can presumably be quickly converted to cash at close to their book values.
Cash is the most liquid of assets, while tangible items are less liquid. The two main types of liquidity include market liquidity and accounting liquidity. Current, quick, and cash ratios are most commonly used to measure liquidity.
39. Which of the following is the most commonly used liquidity ratio? c. A current ratio that is below 1.0 signifies a company's inability to pay its short-term liabilities with its current assets.