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1.
Which ratio simply measures the ability of a company's cash and any investments that are easily converted into cash to pay its short-term obligations?
Cash ratio. Cash ratio is the most conservative of the liquidity ratios.
2.
What is the best way to use financial ratios?
Both of the above. Looked at by themselves, many financial ratios don't tell much. The best way to use them is to compare them with similar companies and to compare them for the same company over time to identify trends.
3.
A company's debt/equity ratio measures _______.
How much of the company is financed by its debt holders compared with its equity holders. The higher the ratio, the more debt is being used.
4.
What does accounts receivable turnover measure?
How effective the company's credit policies are. For example, if the ratio is too low, the company may be having trouble collecting what it is owed.
5.
What ratio measures a company's return on its investment by shareholders?
