Industry Ratios Trivia Quiz!

IBISWorld is partnering with RMA to provide Ratios. The ratio data is generated from the financial statements of small and medium-size businesses that are provided to RMA's member institutions. The question is asking for the number of financial statements used to generate the current data. The correct answer is 260,000, indicating that a large number of financial statements are used to generate the ratio data.

The statement is true because ratio data is a type of quantitative data that allows for meaningful mathematical operations such as addition, subtraction, multiplication, and division. Public and non-public companies can both provide financial data that can be used to calculate ratios such as profitability ratios, liquidity ratios, and solvency ratios. Therefore, both types of companies are included in ratio data analysis.

The given statement is false. The reason is that although IBISWorld and RMA have partnered to publish industry ratios for IBISWorld reports, it does not mean that current clients of both companies should cancel their separate subscription to RMA. The partnership may provide additional value and information, but it does not necessarily replace the need for a separate subscription to RMA.

IBISWorld's primary value in regards to ratios and competitors in the marketplace is the additional industry analysis and insight that they provide, which is not offered by Bizminer and Microbilt. This suggests that IBISWorld offers a unique and valuable perspective that sets them apart from their competitors.

Ratios are typically used in financial analysis and evaluation. While banking, audit, and business valuation all involve financial aspects, marketing focuses more on sales, advertising, and customer behavior. Ratios may not be as relevant or useful in pitching marketing strategies compared to the other verticals.

A banking client would be least likely to use Ratios to assist in hiring new staff. Ratios are typically used in banking for purposes such as identifying triggers and performance tolerance in portfolios, conducting credit analysis for benchmarking, and performing annual credit reviews. However, when it comes to hiring new staff, Ratios may not provide the relevant information needed to assess the qualifications and suitability of candidates. Other methods such as interviews, resumes, and reference checks would be more appropriate for this purpose.

Total Current Assets are indeed an important item on a company's balance sheet because they represent the assets that can be easily converted into cash within one year. These assets include cash, accounts receivable, inventory, and short-term investments. By having a sufficient amount of current assets, a company can ensure that it has enough liquidity to cover its day-to-day operations and expenses. Therefore, it is crucial for investors and stakeholders to analyze the total current assets of a company to assess its financial health and ability to meet short-term obligations.

If a company's Current Ratio indicates that liabilities exceed current assets, it means that the company may not have enough liquid assets to cover its short-term obligations and bills. This can lead to cash flow problems and difficulties in meeting immediate financial obligations. Therefore, the statement is true.

A current ratio of 2:1 would be considered the more ideal or acceptable current ratio. This means that the company has twice as many current assets as it does current liabilities. This indicates that the company has a strong ability to meet its short-term obligations and is in a better position to pay its debts on time. A higher current ratio provides a greater cushion and indicates a healthier financial position for the company.

Clients can view four years of Ratios, including the latest year, on the IBISWorld website. If they choose to download the data, they will be able to access 10 years of historical data.

The correct answer states that the ratios will be updated in November each year and that the existing published ratios cover the period from 4/1/2014 to 3/31/2015. This means that the ratios provided to clients will be updated annually in November, and the data used for these ratios is from the period between April 1, 2014, and March 31, 2015.

The Quick Ratio is also known as the "acid" test because it measures a company's ability to pay off its current liabilities with its most liquid assets. It excludes inventory and other assets that may not be easily converted to cash, providing a more conservative measure of liquidity. By focusing only on the most liquid assets, the acid test gives a clearer picture of a company's immediate financial health and its ability to meet short-term obligations.

The addition of ratios to the industry product does not necessarily mean that CRMs can renew all clients with a standard increase of at least 5%. The statement does not provide any information about how ratios are related to client renewals or pricing. Therefore, it cannot be concluded that the statement is true.