4.1 Choose a term from COLUMN B that matches the description in COLUMN A - NSC Accounting - Question 4 - 2016 - Paper 1
Question 4
4.1 Choose a term from COLUMN B that matches the description in COLUMN A.
Write only the letter (A–D) next to the question number (4.1.1–4.1.4) in the ANSWER BOOK, ... show full transcript
Worked Solution & Example Answer:4.1 Choose a term from COLUMN B that matches the description in COLUMN A - NSC Accounting - Question 4 - 2016 - Paper 1
Step 1
4.1.1 Ability of the business to pay off all its debts
96%
114 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The term that matches this description is C, solvency. This term refers to the ability of a company to meet its long-term debts and financial obligations.
Step 2
4.1.2 Ability of the business to pay off its short-term debts
99%
104 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The appropriate term for this description is D, liquidity. Liquidity measures how quickly and easily a company can convert its assets into cash to satisfy short-term liabilities.
Step 3
4.1.3 The benefit that shareholders receive for investing in the company
96%
101 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
This corresponds to B, return on equity. It refers to the financial return that shareholders receive based on their investment in the company.
Step 4
4.1.4 The extent to which a company is financed by loans
98%
120 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The term suitable for this description is A, gearing. Gearing measures the proportion of a company's financing that comes from debt relative to equity.
