Analyzing Financial Ratios Could Alert a Business Owner to Which

question 78

Multiple Choice

Analyzing financial ratios could alert a business owner to which of these problems?

• A)Excessive inventory
• B)Overextending credit
• C)Too much debt
• D)All of the above

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Definitions:

Accounting Equation

The fundamental equation of accounting, Assets = Liabilities + Shareholder's Equity, representing the relationship between a company's resources and claims against those resources.

Supplies

Items that are consumed or used up in the daily operations of a business, like office supplies or manufacturing materials.

Account

A record in the financial statements that represents a specific asset, liability, equity, revenue, or expense, used to track the changes in those balances.

Electromagnetic Wave

A wave of electric and magnetic fields that propagates through space at the speed of light, including visible light, radio waves, and X-rays.