Descriptive Quantitative Analytic Measures of Financial Statements to Help Evaluate

question 3

Multiple Choice

Descriptive quantitative analytic measures of financial statements to help evaluate liquidity, solvency, profitability and efficiency are called __________.

• A) vertical analysis
• B) horizontal analysis
• C) ratio analysis
• D) pivottables

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Definitions:

Standard Deviation

A numerical index representing the variation or spread in a collection of data points or financial returns.

Sharpe Ratio

A measure used to evaluate the risk-adjusted return of an investment portfolio, calculated by subtracting the risk-free rate of return from the portfolio's return and dividing by the portfolio's standard deviation of returns.

Risk-free Rate

The theoretical rate of return of an investment with zero risk, often represented by Treasury bills.

Borrowing Rate

The interest rate or cost that a borrower pays to secure funds from a lender.