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Match each ratio to what it measures

Exercise and reference answers

Matching pairs
  1. Left
    Current ratio
    Right
    Current assets over current liabilities
  2. Left
    Acid-test ratio
    Right
    Liquidity with inventory taken out
  3. Left
    Net profit margin
    Right
    Net profit as a share of net sales
  4. Left
    Return on equity
    Right
    Net profit measured against owner funds
  5. Left
    Earnings per share
    Right
    Net profit split across shares issued
  6. Left
    Inventory turnover
    Right
    Cost of goods sold over average stock
  7. Left
    Debt-to-equity
    Right
    Total liabilities over owner funds
Instructions
Tap a ratio, then tap the calculation behind it.

Explanation

_Source: OpenStax Introduction to Business, section 14.7 Analyzing Financial Statements_
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