Which of the Following Is an Example of Liquidity Analysis

question 35

Multiple Choice

Which of the following is an example of liquidity analysis?

• A)Total liabilities are divided by total assets.
• B)Net income is divided by average total assets.
• C)Net income is divided by the average number of common shares outstanding.
• D)Quick assets are divided by current liabilities.

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Definitions:

Minimum Acceptable Return

The lowest return on investment that a company or individual is willing to accept when making an investment decision.

Residual Income

The amount of income that an individual or company has after all personal debts and expenses, including the cost of capital, have been paid.

Transfer Price

Transfer price is the price at which goods and services are transferred between departments or subsidiaries of the same company.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.