Lecture 3 Flashcards
1
Q
What does the SOFP show?
A
It is a snapshot of the firms financial position on a particular date
2
Q
What is the accounting equation
A
Assets = Liabilities + Shareholders Equity
3
Q
What do short-term liquidity ratios look at?
A
Current liability coverage
4
Q
What do efficiency ratios look at?
A
Long run ability that a firm can meet its obligations
5
Q
What do profitabilty ratios look at?
A
How efficiently the firm uses its assets to make profits
6
Q
What do market value ratios look at?
A
Focuses on the value of the company’s shares in the market
