List the 12 key ratios outlined in the text and explain the type of information they provide the small business owner

What will be an ideal response?

Students should select from the following 12 key ratios:
1. Current Ratio Firm's ability to pay current debts out of current assets. The rule of thumb for the current ratio is 2:1.
2. Quick Ratio
Extent to which firm's most liquid assets cover its current liabilities. The rule of thumb for the quick ratio is 1:1.
3. Debt Ratio
Measure the financing supplied by business owners and that supplied by business creditors.
4. Debt-to-Net-Worth Ratio
Compares what the business owes to what it "owns."
5. Times Interest Earned
A measure of the firm's ability to make the interest payments on its debt.
6. Average Inventory Turnover Ratio
Measures the average number of times its inventory is "turned over" during the year.
7. Average Collection Period Ratio
Tells the average number of days it takes to collect accounts receivable.
8. Average Payable Period Ratio
Tells the average number of days it takes a company to pay its accounts payable.
9. Net Sales to Total Assets Ratio
A general measure of firm's ability to generate sales in relation to its assets.
10. Net Profit on Sales Ratio
Measures firm's profit per dollar of sales.
11. Net Profit to Asset Ratio
Measures how much profit a company generates for each dollar of assets that it owns.
12. Net Profit to Equity Ratio
Measures owner's rate of return on investment (ROI).