1.M ost common efficiency ratios include, Accounts Receivable Turnover, Working
ID: 400121 • Letter: 1
Question
1.Most common efficiency ratios include, Accounts Receivable Turnover, Working Capital Ratio, Inventory Turnover and current ratio
True/ False
2.Liquidity ratios Are Debt to Equity, Acid Test Ratio, Current Ratio, and Working Capital
True/ False
3.ROI is Margin times Turnover. Margin is efficiency while turnover is profitability.
True/ False
4.
Which of the following ratios is not one that investors and creditors consider when judging how profitable a company is?
Gross Margin Ratio
Inventory turnover
Return on Assets
Profit Margin
Gross Margin Ratio
Inventory turnover
Return on Assets
Profit Margin
Explanation / Answer
1. Most common efficiency ratios include Accounts Receivable Turnover, Working Capital Ratio, Inventory Turnover and Current ratio - True, although currrent ratio is a liquidity ratio but it is sometimes used to express efficiency and it is also very common ratio.
2. Liquidity ratios Are Debt to Equity, Acid Test Ratio, Current Ratio, and Working Capital- True, all are liquidity ratios.
3. ROI is Margin times Turnover. Margin is efficiency while turnover is profitability - False, ROI is Margin times Turnover but Margin is profitability and Turnover is efficiency.
4. Which of the following ratios is not one that investors and creditors consider when judging how profitable a company is- Inventory turnover is not a Profitability ratio.
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