Financial ratios are used to assess and forecast financial and business performance. Match the financial ratio with
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Question:
Financial ratios are used to assess and forecast financial and business performance. Match the financial ratio with its indicator/measure group. Place X in the correct cell to show what each financial ratio indicates or measures.
Financial ratio | Liquidity | Activity | Leverage | Valuation | Profit |
Price-earnings ratio = Share price / Earnings per share | |||||
Debt ratio = Total liabilities / Total assets | |||||
Inventory turnover ratio = cost of goods sold / Average inventory | |||||
Current ratio = Current assets / Current liabilities | |||||
Asset turnover ratio = Sales / Total assets | |||||
Net profit ratio = NPAT / Sales | |||||
Earnings per share ratio = NPAT / Total shares outstanding |
List 3 ways you could identify and/or quantify cashflows
The following evaluation methods use future cash flows. What are the main features and functions of each evaluation method?
Evaluation method | Main features and functions |
Payback period | |
Accounting rate of return | |
Net Present Value |
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