Analysis and Interpretation

Question 1

What is liquidity?

Answer 1

• ability for entity to convert assets to cash (to pay short term debts) –> measure company’s ability to pay off short term by considering current/quick assets

Question 2

What is Current Ratio?

Answer 2

• company’s ability
  = not SUPER accurate b/c assets may not be highly liquid

Question 3

What is Quick ratio?

Answer 3

• ability to meet short-term obligations w its most liquid assets –> excludes inventories from current assets

Question 4

What are the 2 types market performance?

Answer 4

• refers to assessing performance specifically from a shareholder perspective

Types:
- Dividend per share = represents how much shareholders receive as a reward for investing
- Payout Ratio = represents proportion of profits paid out to shareholders as dividends, typically expressed as a %