Question

Scoring: Your score will be based on the number of correct matches. There is no penalty for incorrect or missing matches. Match each ratio that follows to its use. Items may be used more than once. Clear All Quick ratio Indicate future earnings prospects. Dividends per share < Indicate the ability to pay current liabilities. Return on total assets Assess how effectively assets are used Asset turnover ratio Indicate instant debt-paying ability Retum on common stockholders' equity

Answer 1

S.No
1	Indicate future earning prospects	Price to earnings ratio
2	Indicate ability to pay current liabilities	Quick ratio
3	Assess how effectively assets are used	Asset turnover ratio
4	Inidcate Instant debt-Paying ability	Working capital
5	Inidcate the extent to which earnings are being distributed to common stockholders	Dividends per share
6	Indicate how much of company is financed by debt and equity	Ratio of liability to stockholder'sequity
7	Assess the profitability of Assets	Return on Total Assets
8	Assess the profitability of the investment by stockholders.	Return on common stock holder equity

Notes-

Price to earning ratio=Market price of share/Erning per share

1 A higher P/E Indicates that company is expected to earn in future and because of this price of share is more than it's earning.

2 Quick ratio=(Current Asset-Inventory)/Current liability

This rati shows the liquid assets and cash which can be easily used to pay off current laibilities.

3 Asset turnover ratio=Sales/Aaverage total assets.

It shows how much turnover assets are generating and higher it is the mroe affectively assets are used.

4 Instant debt paying ability is working capital as it shows current assets over current liabilities which emans excess cash and liquid assets that can be used to pay off debt.

5 Dividend per share is the dividend distributed to shareholders and it shows extent of earning distributed to shareholders.

6 Ratio of liability to stockholder's equity shows how much debt company has compared to equity.

7 Return on total assets =Net income/Total assets

It shows how much profitable investment in assets is.

8 Return on common stock holder equity=Net income/Stockholder equity

It assess the profitabilkity of invetsment in stockholder equity