Debt ratios show the relationship between debts and equity. Cash and accrual accounting transactions are the same General rise in the price of goods and service in an economy is called deflation The balance sheet equation tells us that assets - liabilities = net profit. Firms are concerned about liquidity, which means the ability to convert invent credit sales. Fixed operating costs can change over time. Inflation is not a problem for most businesses because you can simply raise compensate. Tracking the inflows and outflows of your business Is called accounting. Liquidation-converting assets to cash with a business closure Is called "Chapter 11". Variable cost- Business expenses that must be paid whether or not