Cost of goods sold divided by value of average daily goods on hand is known as
a. a profitability ratio.
b. return on investment.
c. inventory turnover.
d. a liquidity ratio.
e. return on equity.
Question 2Which of the following would be viewed as a measure of the firm's ability to meet its
long-term financial obligations?
a. Liquidity ratio
b. Balance sheet ratio
c. Return on investment
d. Operating ratio
e. Debt ratio
Question 3Use the following information to compute the current ratio:Total
liabilities 18,000
Total assets 200,000
Current assets 80,000
Current liabilities 20,000
Owner's equity 60,000
Net income 120,000
Gross income 340,000
a. 0.25
b. 4.00
c. 4.40
d. 10.00
e. 6.00
Question 4You are a banker reviewing a loan application from a local business. Which of the following
ratios would you look at to get a quick measure of how good a credit risk the business is?
a. Liquidity ratio
b. Return on assets
c. Debt ratio
d. Current ratio
e. Liability ratio
Question 5You are looking at a document that has entries for such items as gross sales, cost of goods
sold, operating profit, and interest expenses. What is the document?
a. Balance sheet
b. Revenue budget
c. Capital expenditure budget
d. Income statement
e. Master budget
Question 6Which of the following financial documents shows a listing of all the organization's assets
and liabilities at a given point in time?
a. Balance sheet
b. Balance sheet budget
c. Income statement
d. Revenue budget
e. Capital expenditures budget
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