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 is considered an asset management ratio?

Inventory Turnover Ratio

Current Ratio

Debt-to-Equity Ratio

Gross Profit Margin

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Verified step by step guidance

Step 1: Understand the concept of asset management ratios. These ratios measure how efficiently a company uses its assets to generate revenue or manage operations. Examples include inventory turnover, accounts receivable turnover, and total asset turnover.

Step 2: Analyze the options provided. Inventory Turnover Ratio is a measure of how efficiently a company manages its inventory, making it an asset management ratio. The formula for Inventory Turnover Ratio is:

\frac{Cost of Goods Sold}{Average Inventory}

Step 3: Evaluate the other options. Current Ratio measures liquidity, Debt-to-Equity Ratio measures financial leverage, and Gross Profit Margin measures profitability. None of these are classified as asset management ratios.

Step 4: Confirm that Inventory Turnover Ratio aligns with the definition of asset management ratios, as it directly assesses the efficiency of asset utilization (inventory in this case).

Step 5: Conclude that the correct answer is Inventory Turnover Ratio, as it is the only option that fits the category of asset management ratios.