Analysis of Financial Statements (Grade 11 NSC Matric Accounting): Flashcards
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Liquidity definition
Liquidity definition
Ability to pay short-term debts
Current ratio benchmark
Current ratio benchmark
2:1 (R2 available for every R1 debt)
Acid test ratio benchmark
Acid test ratio benchmark
1:1 (R1 available for every R1 debt)
Solvency definition
Solvency definition
Ability to meet all obligations
Profitability definition
Profitability definition
Ability to earn income
Debtors collection period norm
Debtors collection period norm
30 days
Creditors payment period norm
Creditors payment period norm
60 to 90 days
Debt-equity ratio benchmark
Debt-equity ratio benchmark
Below 1:1
Return on investment concept
Return on investment concept
How well the owner's investment performs
Net profit on sales shows
Net profit on sales shows
How much of each rand is left over for owners