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Preview questions
1. What is the primary purpose of accounting ratios?
To prepare financial statements · To analyze financial performance · To calculate tax liabilities · To record transactions
2. Which ratio measures the company's ability to meet short-term obligations?
Debt to Equity Ratio · Current Ratio · Gross Profit Ratio · Return on Equity
3. What does the Debt to Equity Ratio indicate?
Liquidity position · Profitability · Financial leverage · Operational efficiency
4. Which ratio is calculated by dividing net profit by sales?
Return on Investment · Net Profit Ratio · Operating Ratio · Current Ratio
5. The formula for the Current Ratio is:
Current Assets / Current Liabilities · Total Assets / Total Liabilities · Net Income / Total Equity · Sales / Total Assets
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