b Which financial statement would Kate need to evaluate whether Sentiments will be
able to meet its current liabilities?
Answer
Balance Sheet
Which of the following ratios should Kate use in that evaluation?
Answer
None of the list ratios would help in the evaluation
c Which financial statement would Kate need to evaluate whether Sentiments will be able to
survive over a long period of time?
Answer
Balance Sheet
Which of the following ratios should Kate use in that evaluation?
Answer
Debttototalassets ratio
d Which financial statement would Kate need to evaluate Sentiments profitability?
Answer
Income Statement
Which of the following ratios should Kate use in that evaluation?
Answer
e How can Kate determine whether Sentiments had outstanding debt at the end of its most
recent year end?
Answer
Which statement could Kate use to determine the answer to the following questions?
i Is Sentiments generating enough revenue to cover its expenses including interest
Answer
ii Is Sentiments generating enough cash from operations to cover debt payments?
Answer
iii. Is Sentiments highly leveraged? HINT: Leverage is the amount of debt a company has
relative to its equity.
Answer
