KEY TERMS Define each of the following terms:

a. Liquid asset

b. Liquidity ratios: current ratio; quick (acid test) ratio

c. Asset management ratios: inventory turnover ratio; days sales outstanding (DSO);

fixed assets turnover ratio; total assets turnover ratio

d. Debt management ratios: total debt to total capital; times-interest-earned (TIE) ratio

e. Profitability ratios: operating margin; profit margin; return on total assets (ROA);

return on common equity (ROE); return on invested capital (ROIC); basic earning power (BEP) ratio

f. Market value ratios: price/earnings (P/E) ratio; market/book (M/B) ratio g. DuPont equation; benchmarking; trend analysis h. “Window dressing” techniques.

AppendixLO1