Answer Happy

Match the following: 1 6 Times interest earned ratio Receivables turnover ratio 2 Current ratio 7 Average days in inventory Match each of the options above to the items below. 3 Approximate number of days the average inventory is held. 8 Inventory turnover ratio Debt to equity ratio Total liabilities divided by total stockholders' equity; measure a company's solvency risk. Ratio that compares interest expense with income available to pay those charges. 4 Acid-test ratio 5 Average collection period Cash, short-term investments, and accounts receivable divided by current liabilities; measures the availability of liquid current assets to pay current liabilities.

Net sales divided by average accounts receivable; the number of times during a year that the average accounts receivable balance is collected. Cost of goods sold divided by average inventory; the number of times the firm sells its average inventory balance during a reporting period. Approximate number of days the average accounts receivable balance is outstanding. Current assets divided by current liabilities; measures the availability of current assets to pay current liabilities.