T2 - FINANCIAL STATEMENT ANALYSIS QUIZ
WITH COMPLETE QUESTIONS AND ANSWERS
[ GRADED A+]
Liquidity Ratios - ✔✔Measure a firm's ability to meet short-term obligations
using current assets.
Profitability Ratios - ✔✔Measure how efficiently a firm generates profit relative
to assets or revenues.
Efficiency Ratios - ✔✔Measure how effectively a firm uses its assets in
operations.
Solvency Ratios (Leverage Ratios) - ✔✔Assess a firm's ability to repay long-term
debt and financial obligations.
, Current Ratio - ✔✔Current Assets / Current Liabilities; shows ability to pay
short-term obligations.
Quick Ratio (Acid-Test Ratio) - ✔✔(Cash + Accounts Receivable) / Current
Liabilities; excludes inventory to test liquidity.
Receivables Turnover - ✔✔Revenue / Average Accounts Receivable; measures
how efficiently a firm collects receivables.
Days Sales Outstanding (DSO) - ✔✔Days in Period / Receivables Turnover;
average days to collect receivables.
Inventory Turnover - ✔✔COGS / Average Inventory; how often inventory is sold
and replaced.
WITH COMPLETE QUESTIONS AND ANSWERS
[ GRADED A+]
Liquidity Ratios - ✔✔Measure a firm's ability to meet short-term obligations
using current assets.
Profitability Ratios - ✔✔Measure how efficiently a firm generates profit relative
to assets or revenues.
Efficiency Ratios - ✔✔Measure how effectively a firm uses its assets in
operations.
Solvency Ratios (Leverage Ratios) - ✔✔Assess a firm's ability to repay long-term
debt and financial obligations.
, Current Ratio - ✔✔Current Assets / Current Liabilities; shows ability to pay
short-term obligations.
Quick Ratio (Acid-Test Ratio) - ✔✔(Cash + Accounts Receivable) / Current
Liabilities; excludes inventory to test liquidity.
Receivables Turnover - ✔✔Revenue / Average Accounts Receivable; measures
how efficiently a firm collects receivables.
Days Sales Outstanding (DSO) - ✔✔Days in Period / Receivables Turnover;
average days to collect receivables.
Inventory Turnover - ✔✔COGS / Average Inventory; how often inventory is sold
and replaced.
