Questions
Questions

Sp25 ACCT D001B 04Y Finan Accountg Ii Final Exam - DeAnza ACCT 1B

Matching

Please match each ratio with it's purpose/meaning. 1: Current Ratio 2: Earnings Per Share (EPS) 3: Price to Earnings (P/E) Ratio 4: Net Profit Margin Ratio

Options
A.Tells us if the stock price is too high or too low
B.Shows us Income as a percentage of sales
C.Captures how well a company uses its assets to generate revenue
D.Tells us if the company is current & up-to-date on paying it's liabilities as of the date of this calculation
E.This ratio reflects the return on investment solely due to the dividends a company pays.
F.Shows us the gross profit margin as a percentage of sales
G.Tells us if a company is "healthy" or at risk of going bankrupt
H.Allows us to see if the stock is going to make us money or make us lose money
I.N/A - This is not a real ratio
J.This ratio measures the adequacy of available cash
K.This ratio indicates a margin of protection for creditors
L.Allows us to easily compare two companies stocks to see which might be a better return on our investment
M.Reflects the stock market's assessment of the company's future performance. Shows if we expect rapid growth or not.
N.Shows us the quality of our earnings and how they translate to cash (which they should if they are high quality earnings)
View Explanation

View Explanation

Verified Answer
Please login to view
Step-by-Step Analysis
We start by restating the task: match each ratio (1 through 4) with its purpose/meaning, and evaluate each provided option to see how it fits. Option A: "Tells us if the stock price is too high or too low". This describes a valuation perspective, which is typically associated with the Price to Earnings (P/E) ratio. The P/E ratio helps assess whether a stock is over- or under-valued relative to its earnings, so this option aligns best with the P/E ratio’s meaning (item 3). It does not describe current liquidity (1), profitability per share (2), or net profit margin as a percentage of sales (4). Option B: "Shows us Income as a percentage of sales". This is the classic definition of net profit margin (net income divided by net sales), i.e., profitability relative to sales. Among the four items, this corresponds to item 4. It is not a liquidity (1), EPS focus (2), or valuation metric (3). Option C: "Captures how well a company uses its assets to generate revenue". That phrase is typically about asset efficiency, often expressed by asset turnover or return on assets, not one of the four given ratios here. Therefore, this option does not map cleanly to any of 1–4 as stated, and it should be considered a distract......Login to view full explanation

Log in for full answers

We've collected over 50,000 authentic exam questions and detailed explanations from around the globe. Log in now and get instant access to the answers!

Similar Questions

CANADIAN TIRE- Part 3 of 11 Walmart is a close competitor of Canadian Tire. If Walmart has ROE of 20% and Quick Ratio of 0.4. What does it mean? 

At Signature Flight Support, managers are reviewing financial statements and discussing how ratios reveal relationships between key areas of the business. Brandon is asked to identify which of the following is an example of a ratio used in financial analysis.

 When are ratios most useful for analysis? 

Ratios provide one way to compare companies in the same industry regardless of their size.

More Practical Tools for Students Powered by AI Study Helper

Join us and instantly unlock extensive past papers & exclusive solutions to get a head start on your studies!