Ratios Measure How Efficiently Managers Are Using the Organization's Resources

question 11

Multiple Choice

ratios measure how efficiently managers are using the organization's resources to generate profits.

• A)Liquidity
• B)Activity
• C)Functional
• D)Leverage
• E)Profit

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Definitions:

Effective-Interest Method

A method of calculating interest that considers the compounding of interest, making it a more accurate measure of interest expense or income over the life of a financial instrument.

GAAP

Generally Accepted Accounting Principles, a standard framework of guidelines for financial accounting used in any given jurisdiction.

Bond Discounts

The financial difference observed when a bond's selling price is less than its stated face value upon sale.

Effective-Interest Method

A way of calculating the amortized cost of a bond and the amount of interest expense over its relevant period.