LECTURE 3 ANALYSIS OF FINANCIAL STATEMENTS
rue-False Easy: Ratio analysis Answer: a Diff: E 1. Ratio analysis involves a comparison of the relationships between financial statement accounts so as to analyze the financial position and strength of a firm. a. True b. False Liquidity ratios Answer: b Diff: E 2. The current ratio and inventory turnover ratio measure the liquidity of a firm. The current ratio measures the relationship of a firm's current assets to its current liabilities and the inventory turnover ratio measures how rapidly a firm turns its inventory back into a "quick" asset or cash. a. True b. False Current ratio Answer: b Diff: E 3. If a firm has high current and quick ratios, this is always a good indication that a firm is managing its liquidity position well. a. True b. False Asset management ratios Answer: a Diff: E 4. The inventory turnover ratio and days sales outstanding (DSO) are two ratios that can be used to assess how effectively the firm is managing its assets in consideration of current and projected operating levels. a. True b. False Inventory turnover ratio Answer: b Diff: E 5. A decline in the inventory turnover ratio suggests that the firm's liquidity position is improving
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- ANALYSIS OF FINANCIAL STATEMENTS
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- ANALYSIS OF FINANCIAL STATEMENTS
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- April 8, 2024
- Number of pages
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- 2023/2024
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- Exam (elaborations)
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- Questions & answers
Subjects
- ratio analysis
- miscellaneous ratios
- roe and debt ratios
- current liabilities
- roe and debt ratios
- accounts receivable
- profit marg
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lecture 3 analysis of financial statements
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leverage and financial ratios
