The Cash Ratio Is Used to Evaluate The

question 25

Multiple Choice

The cash ratio is used to evaluate the:

• A)liquidity of a firm.
• B)speed at which a firm generates cash.
• C)length of time that a firm can pay its bills if no additional cash becomes available.
• D)ability of a firm to pay the interest on its debt.
• E)relationship between the firm's cash balance and its current liabilities.

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for global use in financial reporting.

ASPE

The Accounting Standards for Private Enterprises (ASPE) is a set of accounting standards for private companies in Canada, providing guidelines on financial reporting practices.

Accrual Basis

An accounting method where revenues are recorded when earned, and expenses are recorded when incurred, regardless of when cash is exchanged.

Net Income

The net income of a business once all costs and taxes are subtracted from its total earnings.