ADM 1300 Quiz: Accounting Studying.docx
5 Jan 2015
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ADM 1300 Full Course Notes
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Liquidity ratios: to determine the company"s current financial position. Current ratio: ability to pay short term obligations ( ex. Accounts payable)- if the ratio is 1 then it means the company is unable. Quick ratio: the same but only takes into consideration the most liquid assets. Debt to total assets: indication of debt relative to assets ( the higher the ratio= higher financial risk) Debt to equity ratio: the portion of debt that is used to finance increased operations ( the higher the ratio- the more the company"s financial growth is used with debt) Times interests-earned ratio: company"s ability to meet debt obligations. Fixed charges coverage ratio: how well a company can pay fixed expenses (ex; rent/ interest) Average collection period: how long it takes to receive money back from customers. Inventory turnover: how quickly you sell your inventory ( sold and replaced) Capital assets turnover: ability to generate income from fixed assets ( ppe)
