What does the current ratio measure?

A company's ability to generate profits from its resources.

A company's ability to satisfy its long-term obligations.

A company's operational efficiency in converting assets into sales.

A company's ability to convert its assets to cash and pay off obligations.

What does the price-to-earnings (P/E) ratio indicate?

A company's liquidity position.

The company's return on equity.

How much an investor pays per dollar of earnings.

What is the main purpose of vertical analysis?

To compare the financial ratios of two different companies.

To analyze the changes in financial statement items over time.

To assess a company's liquidity position.

To determine a company's profitability ratios.

What does the defensive interval ratio indicate?

The number of days a company takes to pay its suppliers.

How long a company can pay its daily expenditures with existing liquid assets.

The efficiency of credit and collection processes.

The return earned by a company on its equity capital.

What is the primary purpose of solvency ratios?

To measure the efficiency of operations.

To evaluate a company's liquidity position.

To assess the long-term financial viability of a business.

To measure profitability ratios.

What does the activity ratio "receivables turnover" measure?

The efficiency of operations in utilizing fixed assets.

The effectiveness of inventory management.

The efficiency of credit and collection processes.

The ability to convert assets to cash and pay off obligations.

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