________ Is a Measure of an Organization's Ability to Meet

question 72

Multiple Choice

________ is a measure of an organization's ability to meet its current debt obligations.

• A)Leverage
• B)Activity
• C)Liquidity
• D)Profitability

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Definitions:

Gross Profit

The financial gain made after subtracting the cost of goods sold from total sales revenue.

Ending Inventory

The estimation of goods on hand for sale at the termination of an accounting period, figured by the formula: starting inventory plus acquisitions minus the cost of goods sold.

Inventory Turnover Ratio

A measure of how rapidly inventory is sold or used in a given period, calculated by dividing cost of goods sold by average inventory.

Days' Sales

Often refers to days' sales outstanding (DSO), which measures the average number of days it takes a company to collect payment after a sale has been made.