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MCQ Practice
What are the three types of comparisons commonly
used in financial statements?
A. Accounts Payable, Accounts Receivable & Cash
B. Historical, Industry & Future
C. Vertical analysis, Horizontal analysis and Ratio
Analysis
D. Profitability, Liquidity and Debt
MCQ Practice
What are the three types of comparisons commonly
used in financial statements?
A. Accounts Payable, Accounts Receivable & Cash
B. Historical, Industry & Future
C. Vertical analysis, Horizontal analysis and
Ratio Analysis
D. Profitability, Liquidity and Debt
Current Ratio
Compares current assets to current liabilities
High ratio indicates sufficient assets to cover
current liabilities
Personally, I like to see current ratios in at least the
1.5:1 to 2:1 range!
Acid-Test Ratio
More conservative measure of ability to pay
current liabilities
Ignores current assets such as inventories and
prepaid expenses
These are items we cannot turn to cash SUPER
quick