In the near Term, the Important Ratios That Provide the Information

question 89

Multiple Choice

In the near term, the important ratios that provide the information critical to the short-runoperation of the firm are

• A) liquidity, activity, and debt.
• B) activity, debt, and profitability.
• C) liquidity, activity, and common stock.
• D) liquidity, activity, and profitability.

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Definitions:

Accounts Payable

Liabilities of a business that represent amounts owed to creditors for goods and services received but not yet paid for.

Accrued Liabilities

Liabilities recognized on the balance sheet before a company receives the related goods or services.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash items to arrive at operating cash flow.

Inventory

Items, such as raw materials, work-in-progress, and finished goods, that a company holds with the intention of selling them.