Which of the Following Groups of Ratios Measure a Company's

question 21

Multiple Choice

Which of the following groups of ratios measure a company's ability to pay its long-term debt?

• A)Current ratio and debt ratio
• B)Debt ratio, times-interest-earned ratio and rate of return on total assets
• C)Current ratio and acid-test ratio
• D)Debt ratio and times-interest earned ratio

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Definitions:

Flexible Standards

Performance benchmarks that can adjust based on changes in actual conditions, allowing for more accurate budgeting and control.

Materials Price Variance

A measure of the difference between the actual cost of materials and the expected cost at standard prices.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.