finance and econ midterm

Question 0

difference between current ratio and quick ratio and which is a better predictor of liquidity and why

Answer 0

the quick ration does not include inventory.

quick ratio is the better predictor because inventory is likely to be difficult to convert to cash

Question 1

describe the 3 main financial statement and their purpose

Answer 1

balance sheet- represents the organizations financial condition

income statement- to show the organizations income over a specific period of time

statement of cash flows- provides data to whether the company has sufficient cash on hand to meet its debts and obligations

Question 2

define risk and why is it important to sport management classes

Answer 2

a measure of uncertainty of returns or uncertainty about future conditions that may affect the value of money

Question 3

describe the purpose of the asset turnover ratio and is it better to be high or low and why

Answer 3

to measure how efficiently an organization is utilizing its assets to make money.

Higher because the means the assets are being used more efficiently