FINANCIAL RATIOS MATCHING: a. Inventory Turnover b. Return on Investment c. Acid Test Ratio d. Working Capital e. Average Collection Period f. Current Ratio g. Debt-to-Assets Ratio h. Debt-to-Equity Ratio i. Ratio j. Asset Turnover Ratio 1. 2. 3. 1 ini 9999 4. 5. A comparison between two numbers showing how many times one number exceeds the other The difference between current assets and current liabilities at a point in time. The amount of money that would be left over if all the current liabilities were paid off by current assets The comparison of a firm's current assets to current liabilities. The ratio indicates the amount of current assets available to pay off $1 of current debt Indicates a firm's ability to quickly liquidate assets to pay off current debts. Indicates how quickly a firm's credit accounts are being collected and is a good measure of how efficiently a firm is managing its accounts receivable The number of times during an operating period that the average inventory was sold Tells the number of dollars in sales the firm generates from each dollar it has invested in assets Compares the total debt of the firm with the owner's equity Measures to what degree the assets of the firm have been financed with borrowed funds The amount of profit generated by the firm in relation to the amount invested by the owners 6. 7. 10. a. Efficiency Ratios b. Profitability Ratios c. Leverage Ratios d. Liquidity Ratios 11 12. 13. 14. Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash Financial ratios that indicate how effectively a company uses its resources to generate sales Financial ratios that show how and to what degree a company has financed its assets Financial ratios that tell how much of each dollar of sales, assets, and owner's investment resulted in net profit