Match Each Ratio That Follows to Its Use (Items A-H)

question 99

Multiple Choice

Match each ratio that follows to its use (items a-h) . Items may be used more than once.
-return on total assets

• A)assess the profitability of the assets
• B)assess how effectively assets are used
• C)indicate the ability to pay current liabilities
• D)indicate how much of the company is financed by debt and equity
• E)indicate instant debt-paying ability
• F)assess the profitability of the investment by common stockholders
• G)indicate future earnings prospects
• H)indicate the extent to which earnings are being distributed to common stockholders

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Definitions:

Lost Profits

The amount of income a business fails to earn due to disruptions, such as breaches of contract or other damages, and seeks to recover through legal claims.

Lost Volume Seller

A seller who, despite making a sale to a new customer, still suffers a loss because they would have been able to make that sale in addition to the original sale that was canceled or breached.

Good Faith

The sincere intention to be fair, open, and honest, regardless of the outcome of an agreement or transaction.

Specific Performance

A court order compelling a party to execute a contract according to its precise terms when monetary compensation is inadequate.