For each of the following financial ratios that are based on comprehensive annual financial report (CAFR) information by selecting the appropriate letter of the explanation for that ratio. Answers can only be used once.
A. An indicator of interperiod equity.
B. An indicator of the government’s commitment to replacement of capital assets.
C. An indicator of the government’s reliance on revenues it does not directly control.
D. A measure of the degree to which government assets have been funded with debt.
E. An indicator of the government’s ability to pay its 60- to 90-day obligations.
F. A measure of the government’s capacity to issue debt.
G. A measure of capital asset useful service life.
H. A measure of the government’s liquidity.
I. An indicator of taxpayer debt burden.
J. An indicator of the government’s ability to withstand financial emergencies.
Ratio
1. General fund balances/General Fund operating revenues
2. (Cash + short-term investments)/Current liabilities
3. General obligation long-term debt/Assessed valuation
4. Capital outlay from operating funds/Operating expenditures
5. General bonded debt Legal debt limit
6. Accumulated depreciation/Average cost of depreciable assets
7. Net revenues/Total expenses
8. Charges for services/Total revenues
9. Total liabilities/Total assets
10. Current assets/Current liabilities

An indicator of interperiod equity.

Net revenues/Total expenses

An indicator of the government's commitment to replacement of capital assets

Capital outlay from operating funds/Operating expenditures

An indicator of the government's reliance on revenues it does not directly control.

. Non-tax revenues/Total revenues

A measure of the degree to which government assets have been funded with debt.

Total liabilities/Total assets

An indicator of the government's ability to pay its 60 to 90-day obligations.

(Cash + short-term investments)/Current liabilities

A measure of the government's capacity to issue debt.

General bonded debt/Legal debt limit

A measure of capital asset useful service life.

Accumulated depreciation/Average cost of depreciable assets

A measure of the government's liquidity.

Current assets/Current liabilities

An indicator of taxpayer debt burden.

General obligation long-term debt/Assessed valuation

An indicator of the government's ability to withstand financial emergencies

General fund balances/Operating revenues

The correct answer is D. To make a profit.

Explanation

Capitalism is an economic system in which the means of production are owned by particulars rather than the government, this means, businesses and companies belong mainly to individuals. Additionally, in this economic system, the profits remain in the hands of the owners of the means of production, and it is obtaining profits the main reason and motivation within this system because money or profits represent power in societies and the market as big companies have an advantage over small ones. Also, a peculiarity is that the State does not directly intervene in the businesses of private companies. According to this, in this system, it is assumed business in the U.S. and other countries exist to make a profit. So, the correct answer is D. To make a profit.