#1
What is the current ratio used for in financial analysis?
To measure a company's ability to pay its short-term liabilities with its short-term assets
ExplanationShort-term liquidity assessment.
#2
Which ratio measures a company's ability to cover its interest expenses with its operating income?
Interest coverage ratio
ExplanationDebt servicing capacity.
#3
What does the return on equity (ROE) ratio indicate?
Profitability of a company relative to its total equity
ExplanationEfficiency of equity utilization.
#4
Which ratio is used to measure the efficiency of a company's inventory management?
Inventory turnover ratio
ExplanationInventory management efficiency.
#5
Which financial ratio measures a company's ability to generate profit from its revenue?
Net profit margin ratio
ExplanationProfitability relative to revenue.
#6
What does the debt-to-equity (D/E) ratio indicate?
The proportion of debt and equity in a company's capital structure
ExplanationCapital structure assessment.
#7
What does the quick ratio measure?
A company's ability to meet its short-term liabilities with its most liquid assets
ExplanationImmediate liquidity evaluation.
#8
What does the price-to-earnings (P/E) ratio indicate?
The market value of a company relative to its earnings
ExplanationMarket valuation compared to earnings.
#9
Which ratio measures the proportion of a company's operating income to its revenue?
Operating profit margin ratio
ExplanationOperating efficiency relative to revenue.
#10
Which ratio is used to measure a company's ability to cover its short-term liabilities with its most liquid assets?
Quick ratio
ExplanationImmediate liquidity assessment excluding inventory.
#11
What does the gross margin ratio measure?
A company's ability to generate profit from its revenue
ExplanationProfitability relative to revenue.