Match the terms with the definitions.
-The ratio of gross profit to net sales.
A)accounts receivable turnover
B)book value per share
C)working capital
D)current ratio (working capital ratio)
E)earnings per share
F)gross profit ratio
G)vertical analysis
H)times interest earned ratio
I)leverage measures
J)return on common stockholders' equity
K)quick ratio (acid-test ratio)
L)profitability
M)operating expense ratio

Question

Quizplus · Accepted Answer

The gross profit ratio is the ratio of gross profit to net sales.

K
 The quick ratio (acid-test ratio) measures a company's ability to pay its short-term liabilities with its most liquid assets. It is calculated by subtracting inventory from current assets and dividing the result by current liabilities.

C
 Working capital is the difference between a company's current assets and its current liabilities. It represents the amount of funds available to meet short-term obligations.

D
 The current ratio (working capital ratio) compares a company's current assets to its current liabilities. It indicates whether a company can meet its short-term obligations with its current assets.

E
 Earnings per share (EPS) is the portion of a company's profit that is allocated to each outstanding share of common stock.

J
 Return on common stockholders' equity measures a company's profitability by comparing its net income to the amount of equity held by common stockholders.

L
 Profitability refers to a company's ability to generate profit and is typically measured using metrics such as gross profit, net income, and return on equity.

M
 The operating expense ratio measures a company's operating expenses as a percentage of its net sales.

The answer is:
F, K, C, D, E, J, L, M

Match the Terms with the Definitions