MATCHING&DEFINITION; For each of the ratios listed below, indicate by the approp

Question

MATCHING&DEFINITION; For each of the ratios listed below, indicate by the appropriate code letter, whether it ratio, a profitability ratio, or a solvency ratio. Code L Liquidity ratio P Profitability ratio S Solvency ratio 1. Price-earnings ratio 2. Asset turnover 3. Receivables turnover 4. Earnings per share 5. Payout ratio 6. Current ratio 7. Acid-test ratio 8. Debt to total assets ratio 9. Times interest earned 10. Inventory turnover Match the ratios with the appropriate ratio computation by entering the appropriate space provided. A. Current ratio B. Acid-test ratio C. Profit margin D. Asset turnover E. Price-earnings ratio F. Times interest earned G. Inventory turnover H. Average collection period I. Days in inventory J. Payout ratio

Explanation / Answer

1. Price-earnings ratio = P

2. Asset Turnover = P

3.  Receivables turnover = L

4. Earnings per share = P

5.  Payout ratio = P

6. Current ratio = L

7. Acid test ratio = L

8. Debt to total assets ratio = S

9. Times Interest Earned = S

10. Inventory turnover ratio = L

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