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 are considered the four main Key Performance Indicators (KPIs) commonly used in financial ratio analysis?

Liquidity, Profitability, Efficiency, and Solvency ratios

Current Assets, Fixed Assets, Current Liabilities, and Long-term Liabilities

Net Income, Gross Profit, Operating Cash Flow, and Equity

Revenue, Expenses, Assets, and Liabilities

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Verified step by step guidance

Step 1: Understand the concept of Key Performance Indicators (KPIs) in financial ratio analysis. KPIs are metrics used to evaluate the financial health and performance of a company. They are typically grouped into categories that provide insights into different aspects of the business.

Step 2: Familiarize yourself with the four main categories of financial ratios commonly used as KPIs: Liquidity, Profitability, Efficiency, and Solvency. These categories help assess a company's ability to meet short-term obligations, generate profits, utilize resources effectively, and manage long-term debt.

Step 3: Compare the options provided in the question to the four main KPI categories. For example, 'Liquidity, Profitability, Efficiency, and Solvency ratios' directly aligns with the recognized categories of financial ratio analysis.

Step 4: Evaluate the other options to ensure they do not match the definition of the four main KPIs. For instance, 'Current Assets, Fixed Assets, Current Liabilities, and Long-term Liabilities' refers to components of the balance sheet, not KPI categories. Similarly, 'Net Income, Gross Profit, Operating Cash Flow, and Equity' and 'Revenue, Expenses, Assets, and Liabilities' are financial metrics but do not represent the four main KPI categories.

Step 5: Conclude that the correct answer is 'Liquidity, Profitability, Efficiency, and Solvency ratios,' as these are the established categories of KPIs in financial ratio analysis.