Financial Ratio Analysis

Which ratio can tell us how much a company relies on sales of inventory to meet debt.

• current liabilities to inventory ratio

• current liabilities to net worth ratio

• current ratio

• quick ratio

If quick ratio is equal to 1 or less than 1, it means the Supplier has a need for cash.

• True

• False

What is the formular to measure the net worth of the company?

• fixed assets ÷ net worth

• total liabilities ÷ net worth

• total current liabilities ÷ inventory

• total current liabilities ÷ net worth

Return on assets ratio indicates how profitable a company is based on the money invested into the Supplier.

• True

• False

The accounts payable to sales ratio measures how much of the money to generate sales is through suppliers.

• True

• False

If a long collection period ratio (Accounts receivable ÷ sales X 365) is high, what are the meaning?

• A. The Supplier is offering extended payment terms

• B. There are no problems with customers paying on time