Market value ratios relate the firm's stock piee tu value per share, thus giving management an indication of what investors think company's past performance and future prospects. These include the p ratio, the price/cash flow ratio, and the market/book ratio. rice/earnings Trend analysis, in which one plots a ratio over time, is important because it reveals whether the firm's condition has been improving or deteriorating over time. The DuPont equation shows how the profit margin on sales, the assets turnover ratio, and the use of debt all interact to determine the rate of return on equity . Benchmarking is the process of comparing a particular company with a group of similar successful companies Ratio analysis has limitations, but when used with care and judgment, it can be very helpful. IONS (3-1) Define each of the following terms: a. Liquidity ratios current ratio; quick, or acid test, ratio b. Asset management ratios: inventory turnover ratio; days sales outstanding (DSo); fixed assets turnover ratio; total assets turnover ratio c. Financial leverage ratios debt ratio; times-interest-earned (TIE) ratio; coverage ratio d. Profitability ratios profit margin on sales: basic earning power (BEP) ratio; return on total assets (ROA); return on common equity (ROE) e. Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per share f. Trend analysis; comparative ratio analysis; benchmarking g DuPont equation; window dressing: seasonal effects on ratios