Match Each Ratio That Follows to Its Use (Items A-H)

question 155

Essay

Match each ratio that follows to its use (items a-h). Items may be used more than once.
-Cash and accounts receivable for Adams Company are provided below: What is the amount and percentage of increase or decrease that would be shown with horizontal analysis?
A)assess the profitability of the assets
B)assess how effectively assets are used
C)indicate the ability to pay current liabilities
D)indicate how much of the company is financed by debt and equity
E)indicate instant debt-paying ability
F)assess the profitability of the investment by common stockholders
G)indicate future earnings prospects
H)indicate the extent to which earnings are being distributed to common stockholders

• A)assess the profitability of the assets
• B)assess how effectively assets are used
• C)indicate the ability to pay current liabilities
• D)indicate how much of the company is financed by debt and equity
• E)indicate instant debt-paying ability
• F)assess the profitability of the investment by common stockholders
• G)indicate future earnings prospects
• H)indicate the extent to which earnings are being distributed to common stockholders

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Definitions:

Units of Production

A method of depreciation that allocates the cost of an asset over its useful life based on the number of units it produces or its operational hours.

Budgeted Units

The quantity of product or services that a company plans to produce or sell in a specific period, detailed in its budget.

Inventory

The total amount of goods and materials held by a business for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.

Manufactured Units

Manufactured units refer to the total number of units produced by a company during a specific period through its manufacturing process.