BOMI: Budgeting & Actg Ch 8 Key
Concepts exam questions and answers
2025
What three common ratios are used to determine earning power? - answer Earning per
share, return on equity and common-size comparative statements
Define earnings per share. - answer Data used to evaluate the past performance of a
business, project its future earnings, and weigh investment opportunities.
What is liquidity? - answer Liquidity is the ability of a company to meet its current
obligations
The amount of a company's ______________ is not a measure of its ______________. - answer
working capital; working capital position
Define current ration. - answer the relationship of a company's current assets to its
current liabilities.
What is an easily calculated check on current asset composition? - answer The acid-test
ratio
Define acid-test ratio. - answer The ratio of quick assets to current liabilities. Also called a
quick ratio.
What is inventory turnover? - answer The number of times average inventory is sold
during an accounting period.
A high turnover indicates ________ merchandising. - answer good
Concepts exam questions and answers
2025
What three common ratios are used to determine earning power? - answer Earning per
share, return on equity and common-size comparative statements
Define earnings per share. - answer Data used to evaluate the past performance of a
business, project its future earnings, and weigh investment opportunities.
What is liquidity? - answer Liquidity is the ability of a company to meet its current
obligations
The amount of a company's ______________ is not a measure of its ______________. - answer
working capital; working capital position
Define current ration. - answer the relationship of a company's current assets to its
current liabilities.
What is an easily calculated check on current asset composition? - answer The acid-test
ratio
Define acid-test ratio. - answer The ratio of quick assets to current liabilities. Also called a
quick ratio.
What is inventory turnover? - answer The number of times average inventory is sold
during an accounting period.
A high turnover indicates ________ merchandising. - answer good
