Table of Contents
What category of ratios include return on total assets and return on stockholders equity?
The return on total assets ratio compares a company’s total assets with the amount of money it returns to its shareholders. It is one of five ratios used to assess a company’s profitability along with return on shareholders’ equity, gross profit margin ratio, return on common equity and net profit margin ratio.
What category of ratios includes return on total assets?
There are 3 main categories of ratio: Profitability Ratios – these include the Return on Total Assets, Return on Capital Employed, Net Profit Margin and Net Asset Turnover and are used to assess how profitable the company is.
What category of ratios measures a firm’s ability to meet its short term obligations a profitability B liquidity C Leverage D activity E growth?
The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets. It is also known as the acid-test ratio.
What category of ratios measures how effectively a firm can maintain its economic position?
Profitability ratios measure how well the firm is using its resources to generate profit and how efficiently it is being managed. The main profitability ratios are net profit margin, return on equity, and earnings per share. The ratio of net profit to net sales is the net profit margin, also called return on sales.
What is return on assets and return on equity?
There are 3 main categories of ratio: Profitability Ratios – these include the Return on Total Assets, Return on Capital Employed, Net Profit Margin and Net Asset Turnover and are used to assess how profitable the company is.
What ratio would be considered an activity ratio?
Return on equity (ROE) helps investors gauge how their investments are generating income, while return on assets (ROA) helps investors measure how management is using its assets or resources to generate more income.
What are the 4 financial ratios?
The correct option is: C) Average collection period. In the financial ratio, the average collection period ratio is considered an activity ratio and
Which of the following ratios measure how efficiently a firm uses its assets?
The total assets turnover ratio measures how efficiently an entity uses its assets to tender a sale. Total sales are divided by total assets to decipher how proficiently a business uses its assets.
What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry?
The growth ratio is a ratio used to measure a company’s ability to maintain its economic position and industrial growth. The growth ratios consist of asset growth and sales growth.
What does a return on assets of 12.5% represent?
The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets. It is also known as the acid-test ratio.
What category of ratios measures a firm’s ability to meet its short-term obligations quizlet?
This ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. This is a leverage ratio defining the total amount of debt relative to assets.
Which ratio measures a firm’s ability to pay short-term obligations with its available cash and market securities?
current ratio
Which type of ratio measures a firm’s ability to pay off short-term obligations without relying on inventory sales quizlet?
The current and quick ratios help us measure a firm’s liquidity. The current ratio measures the relationship of the firm’s current assets to its current liabilities, while the quick ratio measures the firm’s ability to pay off short-term obligations without relying on the sale of inventories. You just studied 21 terms!
Which type of ratio measures a firms ability to pay off short-term obligations without relying on inventory sales?
Both the current ratio and quick ratio measure a company’s short-term liquidity, i.e., its ability to generate enough cash to pay off all debts should they become due at once. 4. The quick ratio measures the firm’s ability to pay off long-term obligations without relying on the sale of inventories.
What category of ratio measures how effectively a firm can maintain its economic position in the growth of the economy and industry?
An activity ratio is a type of financial metric that indicates how efficiently a company is leveraging the assets on its balance sheet, to generate revenues and cash.
What category of ratios measures how effectively a firm can maintain its economic position in the growth of the economy and industry quizlet?
Activity ratios measure how effectively a firm is using its resources. Leverage ratios measure a firm’s ability to meet maturing short-term obligations. The total assets turnover ratio is calculated by dividing sales by fixed assets.
What category of ratios measures how effectively a firm is?
This ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. This is a leverage ratio defining the total amount of debt relative to assets.
Is Return on Assets same as return on equity?
Return on Equity (ROE) is generally net income divided by equity, while Return on Assets (ROA) is net income divided by average assets. There you have it.
Which is more important ROE or ROA?
ROA Net Profit/Average Total Assets. Higher ROE does not impart impressive performance about the company. ROA is a better measure to determine the financial performance of a company. Higher ROE along with higher ROA and manageable debt is producing decent profits.
Is return on equity an asset?
What Is Return on Equity (ROE)? Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders’ equity. Because shareholders’ equity is equal to a company’s assets minus its debt, ROE is considered the return on net assets.
What is the meaning of return on assets?
The term return on assets (ROA) refers to a financial ratio that indicates how profitable a company is in relation to its total assets. A higher ROA means a company is more efficient and productive at managing its balance sheet to generate profits while a lower ROA indicates there is room for improvement.
What is an example of activity ratio?
Stock turnover ratio is the most important activity ratio as it helps in understanding the relationship between inventory/average stock and the cost of goods sold. Stock turnover ratio is also known as inventory turnover ratio or stock velocity ratio as it indicates the speed of stock conversion into sales or revenue.
What are the three activity ratios?
Activity Ratios Example Calculation Here in our illustrative example, we’ll be projecting three activity ratios the total asset turnover, fixed asset turnover, and working capital turnover ratios across five years.
What are the major types of activity ratios?
7 types of activity ratios
- Accounts receivable turnover ratio.
- Inventory turnover ratio.
- Fixed asset turnover ratio.
- Total assets turnover ratio.
- Accounts payable turnover ratio.
- Average collection period ratio.
- Working capital ratio.
Jul 31, 2020
What are the 5 financial ratios?
Ratio analysis consists of calculating financial performance using five basic types of ratios: profitability, liquidity, activity, debt, and market.
