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:

Reporting Entities

Organizations or business entities that are required to prepare and present financial statements to relevant stakeholders, usually following specific reporting standards.

Consolidated Financial Statements

Financial statements that present the assets, liabilities, and operating results of a parent company and its subsidiaries as if they were a single entity.

Capacity To Control

Refers to the ability of an entity to direct the financial and operating policies of another entity so as to benefit from its activities.