Which Type of Financial Ratio Is Computed by Dividing the Organization's

question 28

Multiple Choice

Which type of financial ratio is computed by dividing the organization's present assets by its present liabilities?

• A)inventory turnover ratio
• B)days sales outstanding ratio
• C)profit ratio
• D)current ratio
• E)debt-to-assets ratio

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Definitions:

Note Payable

A written promise to pay a specified amount of money, typically including interest, by a certain date.

Operating Cycle

The amount of time it takes for a company to purchase inventory, sell it, and convert the sales back into cash.

Interest Expense

The cost incurred by an entity for borrowed funds, representing interest payments made or accrued on outstanding debts.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net income or loss.