#1
Which ratio measures a company's ability to pay off its short-term obligations?
Current ratio
ExplanationMeasures liquidity through short-term assets.
#2
Which ratio measures the proportion of debt in a company's capital structure?
Debt to equity ratio
ExplanationQuantifies debt versus equity funding proportion.
#3
What does the debt to equity ratio indicate?
The proportion of debt in a company's capital structure
ExplanationShows reliance on debt versus equity financing.
#4
Which ratio is a measure of a company's efficiency in using its assets to generate sales?
Return on assets
ExplanationEfficiency in asset utilization for revenue generation.
#5
What does the price to earnings (P/E) ratio indicate?
The market's perception of a company's future earnings potential
ExplanationEvaluation of future earnings potential relative to market price.
#6
Which ratio measures the relationship between a company's stock price and its earnings per share (EPS)?
Price to earnings (P/E) ratio
ExplanationRelates stock price to earnings per share.
#7
What does the quick ratio measure?
A company's ability to pay off its short-term obligations with its most liquid assets
ExplanationAssesses immediate liquidity using highly liquid assets.
#8
Which ratio is a measure of a company's efficiency in managing its inventory?
Inventory turnover ratio
ExplanationEfficiency in inventory management for sales generation.
#9
Which ratio measures a company's ability to generate profit from its shareholders' equity?
Return on equity
ExplanationProfitability relative to shareholder investment.
#10
Which ratio measures a company's ability to generate profit from its total equity?
Return on equity
ExplanationProfitability relative to total equity investment.