QUESTION 6: Activity (turnover) ratios indicate the firm’s _________ ability. liquidation profit generating debt servicing sales...
QUESTION 6: Activity (turnover) ratios indicate the firm’s _________ ability.
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liquidation |
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profit generating |
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debt servicing |
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sales generating |
Homework Answers
Answer:Sales generating
Activity ratios indicate the firm's ability to generate sales.Activity ratios like Total asset turnover ratio measures the firms ability to generate sales at a given level of total assets.
Other options explained
Liquidation
False.The liquidity ratios(current ratio) indicate the firms liquidation ability.
Profit generating
False.The profitability ratios like net profit ratio indicate the firms ability to generate profit
Debt servicing
False.The Debt service coverage ratio(times interest earned ratio) measure the firms ability to meet its debt obligations.
Add Answer to:
QUESTION 6: Activity (turnover) ratios indicate the firm’s
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a. Calculate (i) debt-equity ratio and (ii) Liquid ratio iii)
Turnover ratios from the following balance sheet and additional
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Balance Sheet
Liabilities Amount - £ Assets Amount - £
Equity shares of £ 10 each 100,000 Goodwill 60,000
Reserves 20,000 Fixed Assets at cost 140,000
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the
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Question 5:
a. Calculate (i) debt-equity ratio and (ii) Liquid ratio iii)
Turnover ratios from the following balance sheet and additional
information.
Balance Sheet
Liabilities Amount - £ Assets Amount - £
Equity shares of £ 10 each 100,000 Goodwill 60,000
Reserves 20,000 Fixed Assets at cost 140,000
Profit and loss account 30,000 Stock 30,000
Secured loan 80,000 Sundry debtors 30,000
Sundry Creditors 50,000 Advances 10,000
Provision for taxation 20,000 Cash 30,000
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the dropdown option for the second question: shareholder and
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