Question

Which of the following statements is TRUE? A) The current ratio is current assets divided by...

  1. Which of the following statements is TRUE?

A) The current ratio is current assets divided by current liabilities.

B) Total asset turnover is net income divided by total assets.

C) The cash coverage ratio equals cash divided by current liabilities.

D) The quick ratio equals current assets - current liabilities divided by current liabilities.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

The current ratio is current assets divided by current liabilities.

This statement is correct

Current Ratio = Current Assets/Current Liabilities

Add a comment
Know the answer?
Add Answer to:
Which of the following statements is TRUE? A) The current ratio is current assets divided by...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Which of the statements below is FALSE? A) The acid ratio test equals current assets minus...

    Which of the statements below is FALSE? A) The acid ratio test equals current assets minus inventories divided by current liabilities. B) Examples of liquidity ratios include the current ratio, the cash coverage ratio, and the quick ratio. C) The current ratio is current assets divided by current liabilities. D) Inventory turnover equals cost of goods sold divided by inventory.

  • Answer the following (True or False): 1. Current liabilities divided by current assets gives the current...

    Answer the following (True or False): 1. Current liabilities divided by current assets gives the current ratio: 2. The quick ratio is the same as the current ratio except that, in the quick ratio, the accounts receivable are not included in the current assets: 3. The total liabilities to total equity ratio is one of several long-term solvency ratios. 4. High financial leverage is indicated by a low debt to equity ratio 5. A company may have a net income...

  • 1) How is the current ratio calculated? a. current assets minus current liabilities b. total assets...

    1) How is the current ratio calculated? a. current assets minus current liabilities b. total assets divided by total liabilities c. total assets minus total liabilities d. current assets divided by current liabilities 2) The common size income statement reports each income statement item as a percentage of a. net sales b. net income c. gross sales d. total assets

  • Some recent financial statements for Earl Grey Golf Corp. follow. Assets 2018 Current assets Cash Accounts...

    Some recent financial statements for Earl Grey Golf Corp. follow. Assets 2018 Current assets Cash Accounts receivable Inventory Total EARL GREY GOLF CORP. 2017 and 2018 Statement of Financial Position Liabilities and Owners' Equity 2017 2018 2017 Current liabilities $ 24,046 $ 24,255 Accounts payable $ 23,184 12,448 15, 235 Notes payable 12,000 25,392 27,155 Other 11,571 $ 61,886 $ 66,645 Total $ 46,755 Long-term debt $ 80,000 Owners' equity $324,695 $365,734 Common stock and paid-in surplus $ 40,000 Retained...

  • Liquidity Current ratio 2014 = current assets/current liabilities 204,000/89,000 = 2.292 for 2014 and 230,000/90,000 =...

    Liquidity Current ratio 2014 = current assets/current liabilities 204,000/89,000 = 2.292 for 2014 and 230,000/90,000 = 2.555 for 2015 Quick Ratio = current assets-inventory/current liabilities 204,000-66,000/89000= 1.550 for 2014 and 230,000-75000/90,000 = 1.722 for 2015 Accounts receivable turnover Credit sales/average debts Average debt 75000+82000/2 = 78500 Total sales = 3,199,900/78500 = 40.76 times (2015) Days sales outstanding = average accounts receivable/sales credit 78500/3199900 x 360 = 8.83 days (2015) Inventory turnover 66,000+75,000/2 = 70,500 Inventory turnover ratio = cost of...

  • Q-2 FINANCIAL RATIO FORMULAS Match each of the following financial ratios with its formula: Accounts Payable...

    Q-2 FINANCIAL RATIO FORMULAS Match each of the following financial ratios with its formula: Accounts Payable Tunover Ratio Fixed Asset Turnover Ratio Asset Turnover Ratio Cash Coverage Ratio Cash Ratio Current Ratio Average Age of Receivables Average Days Supply in Inventory Receivable Turnover Ratio Debt-to-Equity Ratio Earnings per Share (EPS) Financial Leverage Percentage Times Interest Earned Ratio Inventory Turnover Ratico Price/ Earnings (P/E) Ratio Profit Margin Quality of Income Quick Ratio Return on Equity (ROE) Return on Assets (ROA) A....

  • Determine the effect on the current ratio, quick ratio, net working capital (current assets minus current...

    Determine the effect on the current ratio, quick ratio, net working capital (current assets minus current liabilities), the debt ratio (total liabilities to total assets) of each of the following transactions. Consider each transaction seperately and assume that prior to each transaction the current ratio is 1.8x, the quick ratio is 1.5x, and the debt ratio is 75%. Think about what is included in each portion of the ratio. Use "I" for increase, "D" for decrease, and "N" for no...

  • Indicate what is meant by the following ratio calculations. 1. Liquidity Ratios Current Ratio = Current...

    Indicate what is meant by the following ratio calculations. 1. Liquidity Ratios Current Ratio = Current Assets                           Current Liabilities                        = 515800                           626900                      = 0.82 : 1 Quick Ratio = Quick Assets                          Current Liabilities                      = 42700 + 205800                                 626900                      = 0.40 Cash Ratio = Cash & Cash Equivalents                       Current Liabilities                   = 42700                      626900                  = 0.0681 : 1    2. Turnover / Activity Ratios Inventory Turnover = COGS                              Average Inventories...

  • 1. Which one of the following actions will increase the current ratio, all else constant? Assume...

    1. Which one of the following actions will increase the current ratio, all else constant? Assume the current ratio is greater than 1.0. a. Cash purchase of inventory b. Cash payment of an account receivable C Cash payment of an account payable d. Cash sale of inventory at a loss 2. The Equity Multiplier is equal to: @ One plus the debt-equity ratio b. One plus the total asset turnover C. Total debt divided by total equity d. Total equity...

  • 1. Compare the performance of S&S Air to the industry. For each ratio, comment on why...

    1. Compare the performance of S&S Air to the industry. For each ratio, comment on why it might be viewed as positive or negative relative to the industry. Suppose you create an inventory ratio calculated as inventory divided by current liabilities. How do you think S&S Air’s ratio would compare to the industry average? Financial analysis calculations: current ratio = 0.74 quick ratio = 0.39 cash ratio = 0.15 total asset turnover = 2.01 inventory turnover = 27.96 receivables turnover...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT