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

Ratios: Working Capital and the Current Ratio

Financial Accounting

14. Financial Statement Analysis

Ratios: Working Capital and the Current Ratio

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Multiple Choice

Which of the following ratios are equivalent to 1:2?

1:3

0.5:1

2:1

2:4

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Verified step by step guidance

Step 1: Understand the concept of ratios. A ratio is a way to compare two quantities by division. For example, a ratio of 1:2 means the first quantity is half the size of the second quantity.

Step 2: Simplify the given ratios to check if they are equivalent to 1:2. To simplify, divide both parts of the ratio by their greatest common divisor (GCD). For example, in the ratio 2:4, divide both numbers by 2 (the GCD) to get 1:2.

Step 3: Analyze the ratio 1:3. Divide both parts by their GCD (which is 1). The simplified form remains 1:3, which is not equivalent to 1:2 because the proportions differ.

Step 4: Analyze the ratio 0.5:1. Multiply both parts by 2 to eliminate the decimal, resulting in 1:2. This ratio is equivalent to 1:2.

Step 5: Analyze the ratio 2:1. Divide both parts by their GCD (which is 1). The simplified form remains 2:1, which is not equivalent to 1:2 because the proportions differ.