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Ratio Analysys
Ratio Analysys
6. If RGB, Inc. has annual sales of $100,000, average accounts payable of $30,000, and average accounts
receivable of $25,000, RGB’s receivables turnover and average collection period are closest to:
1. To study trends in a firm’s cost of goods sold (COGS), the analyst should standardize the cost of goods
sold numbers to a common-sized basis by dividing COGS by:
5. RGB, Inc. has a gross profit of $45,000 on sales of $150,000. The balance sheet shows average total
assets of $75,000 with an average inventory balance of $15,000. RGB’s total asset turnover and
inventory turnover are closest to:
4. RGB, Inc.’s purchases during the year were $100,000. The balance sheet shows an average accounts
payable balance of $12,000. RGB’s payables payment period is closest to:
3. An analyst who is interested in a company’s long-term solvency would most likely examine the:
A. return on total capital. B. defensive interval ratio. C. fixed charge coverage ratio.
C. Different accounting treatments require the analyst to adjust the data before comparing ratios.