Using Financial Analysis to Assess Business Credit Status


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question 1 of 3

Which of the following types of ratios would NOT help a lender assess creditworthiness?

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1. Calculate the current ratio given the following information: current assets = $50,000; total assets = $300,000; current liabilities = $40,000; total liabilities = $275,000.

2. Calculate the debt-to-equity ratio given the following information: total debt = $600,000; total equity = $850,000; interest expense = $200,000.

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About This Quiz & Worksheet

The quiz/worksheet combo helps check your knowledge of business creditworthiness and financial analysis. You need to know how to calculate different ratios for the quiz.

Quiz & Worksheet Goals

These tools help you assess your knowledge of:

  • Calculating the quick ratio
  • The ratio that measures a company's ability to pay the interest charges on outstanding borrowing
  • Finding the current ratio
  • A ratio that doesn't help the lender assess creditworthiness
  • How to calculate the debt-to-equity ratio

Skills Practiced

  • Information recall - access the knowledge you have gained about finding the current ratio
  • Knowledge application - use your knowledge to answer questions about the different financial ratios used to assess creditworthiness
  • Interpreting information - verify that you can read information about finding the quick ratio and interpret it correctly

Additional Learning

Use the lesson named Using Financial Analysis to Assess Business Credit Status to gain more knowledge about different financial ratios. Use this lesson to cover these objectives:

  • Define creditworthiness
  • Identify different financial ratios
  • See what leverage ratios measure