Question #7 Ratio Analysis Answer each of the ten (10) True or False questions below (1 point each): A. Normally, an analyst would believe that a garment company with a current ratio of 3 to 1 was in serious liquidity trouble Tor F B. The acid test ratio is regarded primanly as a measure of a company's long term liquidity Tor F Tor F Tor F I or F Tor F C. Gross Profit Margin is a measure of the profit percentage por dollar of sales D. Inventory Turnover is computed by dividing cost of goods sold by total assets E. Normally a relatively low Inventory Turnover is desirable F. The Current Ratio is regarded as fundamental measurement of a company's liquidity G. The Debt to Asset ratio measures the extent to which borrowed funds have been used to finance the acquisition of assets H. Tho four classifications of ratio analysis are liquidity ratios, fixed asset ratios, profitability ratios and efficiency ratios 1. A Quick Ratio of 1:5 to 1 is normally considered satisfactory 1. Liquidity ratios measure the ability of a business to moot long term obligations Tor F Ior I or F 1 I or F