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

question 103

Multiple Choice

Match each ratio that follows to its use (items a-h) . Items may be used more than once.
-price-earnings (P/E) ratio

• 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

Understand the components and preparation of a multiple-step income statement.

Analyze the effects of sales, expenses, and transactions on net income, gross profit, and stockholders' equity.

Understand cash flow statement components and what constitutes an operating activity.

Calculate and understand stockholders' equity and how transactions affect its components.

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Definitions:

Financial Accounting

The branch of accounting focused on the summary, analysis, and reporting of financial transactions pertaining to a business, resulting in the preparation of financial statements.