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Standards for Comparison in Financial Statement Analysis

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

How do you calculate the debt ratio?

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1. What is the formula for the current ratio?

2. Last period, your company had a debt ratio of 0.6. This period, the debt ratio was 0.8. How would you interpret these results?

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About This Quiz & Worksheet

A detailed financial analysis often involves comparing ratios. This quiz and worksheet will test your knowledge of terms such as ratios, ratio analysis, and the standards for comparing ratios. In order to pass the quiz, you'll also need to be familiar with the formulas for calculating debt ratio and current ratio.

Quiz & Worksheet Goals

This assessment will test your knowledge of:

  • Steps of the ratio analysis process
  • Standards for comparing ratios
  • Calculating debt ratio and current ratio

Skills Practiced

  • Critical thinking - apply relevant concepts to examine information about ratio analysis in a different light
  • Problem solving - use acquired knowledge to solve debt ratio and current ratio practice problems
  • Distinguishing differences - compare and contrast topics from the lesson such as current ratio, debt ratio, debts, and assets

Additional Learning

To learn more about comparison principles in financial statement analysis, review the accompanying lesson, Standards for Comparison in Financial Statement Analysis. The lesson provides an overview of the following:

  • Definition of ratio analysis
  • Four standards for comparing ratios
  • Definitions of debts and assets
  • Formulas for debt ratio and current ratio
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