Explain the Relationship Between Each of the Following Ratios and Liquidity

question 38

Essay

Explain the relationship between each of the following ratios and liquidity risk.
(a)Loan-to-deposit ratio
(b)Borrowed funds to total assets
(c)Loan commitments to total assets

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Definitions:

Products

Items or goods that have been produced for sale or consumer use.

Absorption Costing

A method of accounting for costs in which all costs of manufacturing a product, including fixed factory overheads, are attributed to the product.

Production Planning

The process of organizing and controlling every aspect of production, including scheduling, material handling, and labor allocation, to ensure efficient and effective output.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed overhead expenses as period costs.