All of the Following Ratios Are Used to Evaluate Short-Term

question 39

Multiple Choice

All of the following ratios are used to evaluate short-term liquidity except:

• A)the receivable turnover ratio.
• B)the current ratio.
• C)the inventory turnover ratio.
• D)the gross margin ratio.
• E)None of the answer choices is correct.

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Definitions:

Amortization

Amortization is the process of gradually reducing the cost of an intangible asset over its useful life, or systematically repaying a debt over a period of time.

Intra-Entity Bonds

Intra-entity bonds refer to bonds issued between entities within the same corporate group, used for internal financing purposes.

Straight-Line Method

The straight-line method is a way of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee, usually through ownership of 20-50% of voting stock.