Match each ratio to its use. Items may be used more than once. Uses: To assess t
ID: 2374754 • Letter: M
Question
Match each ratio to its use. Items may be used more than once.
Uses:
To assess the effectiveness in use of assets
To assess the profitability of the assets
To assess the profitability of the investment by common stockholders
To indicate future earnings prospects
To indicate instant debt paying ability
To indicate the ability to meet currently maturing obligations
To indicate the extent to which earnings are being distributed to common stockholders
To indicate the margin of safety to creditors
Explanation / Answer
. Price-Earnings (P/E) Ratio -o indicate the margin of safety to creditors ============================================================================================================================================================================================= 2. Working Capital ---To indicate the ability to meet currently maturing obligations ============================================================================================================================================================================================ 3. Rate Earned on Total Assets ---To assess the profitability of the assets ============================================================================================================================================================================================ 4. Ratio of Liabilities to Stockholders' Equity ============================================================================================================================================================================================ 5. Quick Ratio -To indicate instant debt paying ability ============================================================================================================================================================================================ 6. Rate Earned on Common Stockholders' Equity ============================================================================================================================================================================================ 7. Current Ratio ---To indicate the ability to meet currently maturing ============================================================================================================================================================================================ 8. Ratio of Net Sales to Assets ---To assess the effectiveness in use of assets ============================================================================================================================================================================================ 9. Dividends per Share ============================================================================================================================================================================================ 10. Earnings per Share (EPS) on Common Stock----------To indicate the extent to which earnings are being distributed to common stockholders ============================================================================================================================================================================================