Question 7Question text(T / F) Liquidity ratios show a company's capacity to pay maturing current liabilities.Select one:True False FeedbackCorrect. Liquidity ratios such as the current ratio and acid-test ratio indicate a company's short-term debt-paying ability.

Question 8Question text(T / F) Financial statement analysts must be sure that comparable data are used among companies to make the comparisons valid.

Question 9Question text(T / F) An equity investor is more focused on the Gross Profit Ratio than the Return on Sales ratio.

Question 10Question text(T / F) Assume that Company A does not have any prepaid expenses on its balance sheet. If the Current Ratio is 1 and the Quick Ratio is 0.8, inventory equals 20% of current liabilities. Select one:

FeedbackCorrect. The only difference between the two ratios is the elimination of inventory in the numerator. Liquidity ratios indicate a company's short-term debt-paying ability. These ratios include: (Select all that apply). Each incorrect answer results in a negative point mark. Select one or more:a. Number of days' sales in accounts receivable. This is open for debate. While your textbook marks this as a liquidity ratio, other sources do not. Therefore,there is no positive nor negative mark for checking this answer.b. Stock Value to Sales ratio. c. Inventory turnover. This is open for debate. While your textbook marks this as a liquidity ratio, other sources do not. Therefore,there is no positive nor negative mark for checking this answer.d. Equity ratio. e. Accounts receivable turnover. This is open for debate. While your textbook marks this as a liquidity ratio, other sources do not. Therefore,there is no positive nor negative mark for checking this answer.f. Current ratio. g. Cash ratio, aka as cash flow liquidity ratio. h. Quick ratio, aka as acid-test ratio. i. Total assets turnover. This is open for debate. While your textbook marks this as a liquidity ratio, other sources do not. Therefore,there is no positive nor negative mark for checking this answer.FeedbackThe correct answers are: Current ratio., Quick ratio, aka as acid-test ratio., Cash ratio, aka as cash flow liquidity ratio.Question 2