The Higher the Value of the _______ Ratio,the Better Able

question 63

Multiple Choice

The higher the value of the _______ ratio,the better able the firm is to meet its short-term financial obligations.

• A) debt to equity
• B) liquidity
• C) earnings per share
• D) EBIT to long-term funds

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Definitions:

Net Sales

The revenue from goods or services sold after deducting returns, allowances for damaged or missing goods, and any discounts allowed.

Operating Expenses

Operating expenses are costs associated with running a business day-to-day, excluding costs linked to producing goods and services.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and manufacturing overhead costs.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets in generating sales revenue; calculated by dividing sales by total assets.