Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Introduction to Ratios

Financial Accounting

14. Financial Statement Analysis

Introduction to Ratios

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Multiple Choice

Which of the following formulas is used to determine a company's customer retention rate?

Customer Retention Rate = \frac{\text{Number of new customers}}{\text{Number of customers at end of period}} \times 100\%

Customer Retention Rate = \frac{(\text{Number of customers at end of period} - \text{New customers acquired during period})}{\text{Number of customers at start of period}} \times 100\%

Customer Retention Rate = \frac{\text{Total Sales}}{\text{Total Customers}}

Customer Retention Rate = \frac{\text{Number of customers lost during period}}{\text{Number of customers at start of period}} \times 100\%

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Verified step by step guidance

Step 1: Understand the concept of customer retention rate. It measures the percentage of customers a company retains over a specific period, reflecting customer loyalty and satisfaction.

Step 2: Analyze the given formulas. The correct formula for customer retention rate is: Customer Retention Rate = \frac{(\text{Number of customers at end of period} - \text{New customers acquired during period})}{\text{Number of customers at start of period}} \times 100\%.

Step 3: Break down the components of the correct formula: (a) Number of customers at the end of the period, (b) New customers acquired during the period, and (c) Number of customers at the start of the period.

Step 4: Subtract the number of new customers acquired during the period from the number of customers at the end of the period. This gives the number of retained customers.

Step 5: Divide the number of retained customers by the number of customers at the start of the period, then multiply by 100% to express the retention rate as a percentage.