Common Financial Ratios: Terms & Use

Instructions:

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

question 1 of 3

When looking at debt-to-equity ratios, which of the following steps is important?

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1. Which of the following shows how well a company can pay current liabilities when they're due?

2. You're completing the value for a company's price-earnings ratio. The value is $100. What does this mean?

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About This Quiz & Worksheet

This handy quiz/worksheet combo provides a helpful way to check your understanding of common financial ratios. Here you'll be asked about the price/earnings ratio, return on equity and debt-to-equity ratios.

Quiz & Worksheet Goals

Use this quiz to see how well you can:

  • Outline the important steps in debt-to-equity ratio analysis
  • Identify which ratio shows how well a company can pay current liabilities
  • Explain what a $100 price/earnings ratio value means
  • Discuss the ratio needed before you can calculate the price/earnings ratio
  • Select the best value for return on equity from a list of options

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about the steps involved in calculating the debt-to-equity ratio
  • Interpreting information - verify that you can read information regarding a price/earnings ratio value and interpret it correctly
  • Information recall - access the knowledge you've gained regarding what is needed to calculate the price/earnings ratio
  • Reading comprehension - ensure that you draw the most important information from the related lesson on common financial ratios

Additional Learning

For more information about this topic, take a look at our lesson called Common Financial Ratios: Terms & Use. This lesson will help you answer the questions on this quiz and meet the following objectives:

  • Describe the formula used to find earnings per share
  • Explain where you would find long-term and short-term debt for a company
  • Detail another term for quick ratio
  • Identify which ratio explains how quickly a company can generate cash and pay off short term debt
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