Match the terms with the definitions.
-The ratio of net sales on account to the average amount of net accounts receivable.
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 ratio of net sales on account to the average amount of net accounts receivable is the accounts receivable turnover.

Answer: B
 Book value per share is the total common equity divided by the number of common shares outstanding.

Answer: C
 Working capital is current assets minus current liabilities.

Answer: D
 The current ratio (working capital ratio) is current assets divided by current liabilities.

Answer: E
 Earnings per share is the amount of net income earned per share of common stock outstanding.

Answer: F
 The gross profit ratio is gross profit divided by net sales.

Answer: G
 Vertical analysis is a technique used to analyze financial statements by expressing each item as a percentage of a base amount.

Answer: H
 The times interest earned ratio is earnings before interest and taxes (EBIT) divided by interest expense.

Answer: I
 Leverage measures are ratios that indicate the level of debt a company has relative to its equity.

Answer: J
 Return on common stockholders' equity is net income divided by average common stockholders' equity.

Answer: K
 The quick ratio (acid-test ratio) is quick assets (cash, marketable securities, and accounts receivable) divided by current liabilities.

Answer: L
 Profitability is the ability of a company to generate earnings.

Answer: M
 The operating expense ratio is operating expenses divided by net sales.

Match the Terms with the Definitions