Match the Classifications of Ratios with Each Description

question 137

Multiple Choice

Match the classifications of ratios with each description.
-Measures the earning ability of a company

• A)Liquidity Ratio
• B)Leverage Ratio
• C)Profitability Ratio
• D)Horizontal Analysis
• E)Trend Analysis

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Definitions:

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.

Net Income

The total profit of a business after all expenses, including taxes and interest, have been deducted from revenue, reflecting the company's profitability.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Prepaid Insurance

Payments made in advance for insurance services, which is recorded as an asset on the balance sheet and expensed over the period the insurance coverage is applicable.