Question
Why should turnover ratios use average balances when beginning and ending figures are available?
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Answer
They better match the period’s activity.
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Question
How do the current ratio and quick ratio differ in what they include?
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Answer
Quick excludes inventory and prepaids; current includes them.
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Question
How is the P/E ratio computed?
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Answer
Market price per share divided by EPS.
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Question
Why is DuPont useful on the CPA exam?
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Answer
It separates profitability, efficiency, and leverage.
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