Suppose that you were trying to determine how much income was available for future monetary needs as well as for investments.Which of the following ratios would you most likely use?
A)Current ratio
B)Debt ratio
C)Savings ratio
D)Total asset turnover
E)None of the above

Question

Quizplus · Accepted Answer

The most appropriate ratio to determine how much income is available for future monetary needs and investments is the Savings Ratio. This ratio helps to determine the proportion of disposable income that is saved after all expenses have been met. By determining a person's savings ratio, one can estimate how much money is available to allocate towards future monetary needs and investments. The Current Ratio is used to measure a company's ability to pay off its short-term liabilities, the Debt Ratio shows how much of a company's assets are being financed by debt, and the Total Asset Turnover measures how efficiently a company is using its assets to generate revenue. None of these ratios directly measure income available for future monetary needs and investments.

Suppose That You Were Trying to Determine How Much Income