📝 One-liners · 65 cards
RATIO ANALYSIS 3
What does the Debt-Equity Ratio measure in a firm's financial structure?
It measures the proportion of debt financing relative to equity, indicating the degree of financial leverage and creditors' risk exposure.
What is the formula for calculating the Absolute Liquid Ratio?
Cash plus marketable securities divided by current liabilities
How is the Current Ratio calculated and what does a ratio of 2:1 signify?
Current Ratio = Current Assets / Current Liabilities; a 2:1 ratio is traditionally considered ideal, indicating the firm can comfortably cover short-term obligations.
What does a Current Ratio below 1:1 indicate about a firm's liquidity position?
Firm cannot meet short-term obligations from current assets
🔒
Unlock 65 revision one-liners
Interactive flashcard deck — flip every card to drill questions and answers, mark the ones you got wrong, and revise smarter for RATIO ANALYSIS 3.
🪙
Unlock cost
300 coins
30-day access · re-unlocks free for 30 days