WGU C201 BUSINESS ACUMEN CHAPTER 15 & 16: ACCOUNTING AND FINANCIAL STATEMENTS – RATIOS QUESTIONS AND ANSWERS WITH COMPLETE SOLUTION

WGU C201 BUSINESS ACUMEN
CHAPTER 15 & 16: ACCOUNTING AND
FINANCIAL STATEMENTS – RATIOS
QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTION
Current assets / current liabilities -ANSWER ✔✔Current Ratio


Current assets - minus inventory / current liabilities -ANSWER ✔✔Acid Test
(Quick) Ratio
Current assets $250
Inventory $20
Current Liabilities $100
250-20=230
230/100=2.2
$2.20 assets for every $1 in liabilities


Acid Test (Quick) Ratio and Current Ratio -ANSWER ✔✔Liquidity Ratios


Inventory Turnover, Receivables Turnover, and Total Asset Turnover -
ANSWER ✔✔Activity Ratios


Cost of goods sold / average inventory -ANSWER ✔✔Inventory Turnover.
Equals the number of times inventory moves through a business.
Cost of Goods Sold $200,000
Average Inventory $20,000
200000/20000 = 10
Compare these to industry averages for industry.