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Match the Following Financial Statement Ratios with Their Definition

Question 59

Matching

Match the following financial statement ratios with their definition.

Premises:
Working capital
Current ratio
Profit margin
Return on assets
Debt to equity ratio
Return on equity
Asset turnover
Responses:
A measure of profitability that shows the proportion of a company's assets that is financed by creditors and the proportion financed by stockholders
A measure of liquidity that shows the net current assets on hand to continue business operations
A measure of profitability that relates the amount earned by a business to the stockholders' investment in the business
A measure of profitability that shows the percentage of each sales dollar that results in net income
A measure of liquidity; current assets divided by current liabilities
A measure of profitability that shows how efficiently a company uses its assets to produce income
A measure of how efficiently assets are used to produce sales

Correct Answer:

Working capital
Current ratio
Profit margin
Return on assets
Debt to equity ratio
Return on equity
Asset turnover
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