Question
Why do many ratios use average balances instead of period-end balances?
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Answer
They compare a flow to a stock.
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Question
Why does the quick ratio exclude inventory and prepaids?
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Answer
They are less liquid current assets.
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Question
Why is a revenue variance favorable when actual exceeds budget?
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Answer
Higher revenue increases income.
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Question
How is EBITDA reconciled from net income?
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Answer
Add interest, taxes, depreciation, and amortization.
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