Following are denitions or descriptions of terms relating to ratio analysis (1) Involves studying the relationship between two or more nancial statement items (2) Indicates the amount that investors are willing to pay for each $1 of a companys earnings over the past 12 months (3) Involves a compare...

Following are denitions or descriptions of terms relating to ratio analysis. (1) Involves studying the relationship between

Question:

Following are deﬁnitions or descriptions of terms relating to ratio analysis.
(1) Involves studying the relationship between two or more ﬁnancial statement items
(2) Indicates the amount that investors are willing to pay for each $1 of a company’s earnings over the past 12 months
(3) Involves a compare is on of a company’s ﬁnancial ratios with those of competing companies or industry norms
(4) Measures a ﬁrm’s ability to generate sales relative to its investment in assets
(5) Focuses on changes in a ﬁrm’s ratios over a period of time
(6) Indicates how the capital markets as a whole perceive a company’s Indicates the percentage of each sales dollar that contributes to net income
(8) Measures a ﬁrm’s ability to pay its current liabilities without relying on the sale of its inventory
(9) Indicates how well a company is managing its assets
(10) Indicates the number of times that a ﬁrm sells or turns over its inventory each year
(11) Measures a ﬁrm’s ability to pay its current liabilities from its current assets
Required:
Match each deﬁnition or description listed with an appropriate term from the following list:
(a) Ratio analysis
(b)
(c) Total ratio
(d) Cross-sectional ratio analysis
(e) Current ratio
(f) Proﬁt margin percentage
(g) Longitudinal ratio analysis
(h) Leverage ratio
(i) Market strength ratio
(j) Quick ratio
(k) Price-earnings ratio
Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.