Which Financial Ratio Measures the Extent to Which the Company's

question 13

Multiple Choice

Which financial ratio measures the extent to which the company's capital is in cash or cash equivalents?

• A) quick ratio
• B) current ratio
• C) cash ratio
• D) strategic ratio
• E) inventory ratio

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Definitions:

Percentage of Sales Method

A financial forecasting technique where future values such as budgets or debt levels are estimated based on a specified percentage of sales.

Allowance for Doubtful Accounts

An estimation of the amount of credit sales that are expected to not be collected due to customer defaults.

Accounts Receivable

Money owed to a company by customers for products or services that have been delivered but not yet paid for.

Credit Sales

Sales made on credit, where the buyer is allowed to pay the amount owed at a later date, common in business-to-business transactions.