CHAPTER 3-1 - b. Cash ratio represents the ability of the...

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b. Cash ratio represents the ability of the firm to completely pay off its current liabilities with its most liquid asset (cash). c. Total asset turnover measures how much in sales is generated by each dollar of firm assets. d. Equity multiplier represents the degree of leverage for an equity investor of the firm; it measures the dollar worth of firm assets each equity dollar has a claim to. e. Long-term debt ratio measures the percentage of total firm capitalization funded by long-term debt. f. Times interest earned ratio provides a relative measure of how well the firm’s operating earnings can cover current interest obligations. g. Profit margin is the accounting measure of bottom-line profit per dollar of sales. h. Return on assets is a measure of bottom-line profit per dollar of total assets. i. Return on equity is a measure of bottom-line profit per dollar of equity. j. Price-earnings ratio reflects how much value per share the market places on a dollar of accounting earnings for a firm. 5.
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This note was uploaded on 07/15/2010 for the course FINANCE 318 taught by Professor Spurlin during the Spring '08 term at LA Tech.

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CHAPTER 3-1 - b. Cash ratio represents the ability of the...

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