Short Term 531 Week 1 Quiz

Short-Term Solvency Ratio: A) Current Ratio = Current Assets / Current Liabilities, B) Quick Ratio = (Current Assets – Inventory) / Current Liabilities, C) Cash Ratio = Cash / Current Liabilities
Asset Utilization Ratios: A) Turnover = Sales / Total Assets, B) Inventory Turnover = Cost of Goods Sold / Inventory, C) Receivables Turnover = Sales / Accounts Receivables
Long-term Solvency Ratio: A) Total Debt Ratio = Total Debt (Current Liabilities + Long term Liabilities) / Total Assets, B) Debt-Equity Ratio = Total Debt / Total Equity, C) Equity Multiplier = Total Assets / Total Equity, D) Times Interest Earned = EBIT (Earnings Before Interest & Tax) / Interest Expense, E) Cash Coverage Ratio = (EBIT + Depreciation) / Interest Expense
S-Corp\ Which form of business has no differentiation or liability protection for its owner(s)? Sole Pro\ Increasing the market price of a companies stock will always lead to shareholder wealth
No cash accounting transactions are ignored.\ Which of the following is an Assumption of financial statements? Perodicity, Going Concern, Accrual Basis\ principle dictates that companies record assets at their historical cost principle dictates that companies record assets at their historical cost\ The materiality constraint Relates to a financial statement item's impact on a company's overall financial condition and operations. Size is a big factor.\ Revenues - COGS - Admin Expense = Earnings\ Cash + Inventory + A/R = Current Assets\ Accounts Payable + Short term N/P = Current Liabilities\ Working Capital = current assets – current liabilities\ Net Operating Working Capital = Current assets - Current liabilities - Notes Payable\ Net Operating Working Capital takes into consideration the interest bearing loans. Notes paying interest also have an impact on the financial statements and company performance because of the interest costs. NOWC show what would be leftover to operating with if these loans were paid.\ Earnings