Exercise 131 Building blocks of analysis LO C1 For each rati

Exercise 13-1 Building blocks of analysis LO C1

For each ratio, select the building block of financial statement analysis to which it best relates.

The four building blocks of financial statement analysis are as follow: Liquidity and Efficiency, Profitability, Market Prospects, and Solvency.


1.	Equity ratio
2.	Return on total assets
3.	Dividend yield
4.	Book value per common share
5.	Days’ sales in inventory
6.	Accounts receivable turnover
7.	Debt-to-equity ratio
8.	Times interest earned
9.	Gross margin ratio
10.	Acid-test ratio

1. Equity ratio - Solvency

2. Return on total assets - Profitability

3. Dividend yield - Market prospects

4. Book value per common share - Profitability

5. Days’ sales in inventory - Liquidity and efficiency

6. Accounts receivable turnover - Liquidity and efficiency

7. Debt-to-equity ratio - Solvency

8. Times interest earned - Solvency

9. Gross margin ratio - Profitability

10. Acid-test ratio - Liquidity and efficiency