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Stocks 304: Interpreting the Numbers

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1.
What does accounts receivable turnover measure?
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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.
2.
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?
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Cash ratio. Cash ratio is the most conservative of the liquidity ratios.
3.
A company's financial ratios are typically analyzed _______.
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Over time and against other companies. Using them in this manner provides important information about trends and management quality in the company.
4.
A company's debt/equity ratio measures _______.
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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.
5.
What ratio measures a company's return on its investment by shareholders?
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Return on equity. The key word here is "equity."