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a. Define the term quick ratio.
The quick ratio is a short-term liquidity ratio that measures a firm's ability to meet its current liabilities. And when measuring the quick ratio, the stock could be ignored.
b. Distinguish between gross profit and net profit.
The gross profit shows the difference between a company's sales revenue and the cost of goods sold. Gross profit = sales revenue - cgcs
However, net profit is the amount of money the business earns after deducting all operating, interest, and tax expenses over a given period of time.
c. Comment on why it is important for potential investors to consider non-financial factors when making investment decisions.
It is important for potential investors to consider the non-financial factors because not all choices are made on the quantitative position. Quantitative analysis may not be reliable due to the value in the table of both firms.
The non-financial factors allow investors to look at the potential possibilities that allow investors to consider before investing. This will give a chance for the investors to see, whether the company is good enough, and show what is the benefit that investors have when investing in.

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(a) The acid test ratio also known as the quick ratio is similar to the current ratio where it deals with a firm's liquid assets and short-term liabilities except it ignores stock when measuring the short-term liquidity.

(b) Gross profit is the profit after deducting the costs of goods sold. On the other hand, net profit is the actual profit after any others cost taken place.

(c) Non-financial aspects such as service quality, a company's flexibility, resource usage, and market orientation, all of which have an impact on how the company's business is handled, are important for potential investors to consider.

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a) Quick ratio is a liquidity ratio that measures a firm's ability to meet its short-term debts. It ignores stock because not all inventories can be easily turned into cash in a short time frame.

B)

Net profit reflects the amount of money your business is left with after having paid all your permissible oparational expenses such as tax or rent cost, while gross profit is the amount of cash after deducting the expense of merchandies sold from income. In addition, you need to calculate the gross profit to arrive at a net profit because the formula to calculate the net profit is using the gross profit to subtract the other expenses.

C)

While financial factors consist of  Leverage, Liquidity, Fixed Assets Intensity, costs, and revenues. Non-financial factors consist of ownership, quality of services, and the flexibility of the company. As a manager, we would like to clarify and consider which factors is beneficial for potential investors during making investment. For an instance, using non-financial factors helps consider the possibilities and implications. Just like if the company has strong sales now but poor customer service, that issue will compound and affect the bottom-line if left unchecked. By tracking non-financial factors early, executives and managers make better decisions regarding needed adjustments. It’s helps businesses measuring employees morale, engagement and turnover rate helps an entity understand when it needs to put more sources into its workforce. Non-financial information used in decision-making cases has very real implications for the financial health of an organization. Performance and productivity directly affect a business’s bottom line. It’s also helps to attract more employees want to come and work. Additionally, considering non-financial factors could help businesses invest in the right tools.

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a) The quick ratio/acid test ratio measure's firm's ability to meet their current liabilities. It ignores the number of stocks, as all inventories are not easily can be turn to cash in a short period of time.

b) Gross profit represents the income or profit remaining after the production costs have been subtracted from the revenue. Gross profit helps investors to determine how much profit a company earns from the production and the sales of its own goods and services.

Net Profit is the profit remains after all expenses and costs have been subtracted from the revenue. This helps investors  to identify the overall profitability of the company, which reflects on how effectively a company is managed.

c) It is important for potential investors to consider the non-financial factors, as there are factors including the quality of services, the flexibility of a company, utilization of resources, market orientation, and many other, which reflects on the performance of the company is managed.
The non-financial factors allows investors to see the potential possibilities and implications that allows potential investors to consider before investing. This will give a better overview for the investors to see, whether the company is responsible enough with the amount of trust that the potential investors are willing to give.

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(a)           The quick ratio, as known as the acid test ratio, is a liquidity ratio that measures a firm’s ability to meet its short-term debts. The general equation of this ratio is (Current assets – Stock)/ current liabilities. It ignores stock because not all inventories can be easily turned into cash in a short time period.

(b) Gross profit shows the difference between a firm’s sales revenues and its costs of goods sold. Net profit is calculated after deducting expenses from gross profit. The examples of expenses would be the indirect or fixed costs of production. Hence, the net profit would be less than gross profit and net profit would provide more precise figures for businesses than gross profit.

(c) Financial factors only deal with costs and revenues for businesses. There are so many factors needed to be taken into consideration when it comes to the success of businesses. I’m going to provide some examples relevant to non-financial factors that would be beneficial for potential investors to take into consideration when making investment decisions.

One example would be staff morale and motivation. When businesses face financial collapse or any kind of situations that harm their budgets, businesses tend to seek for ways to reduce the cash outflows. In such a case, businesses may reduce the salaries of employees and try to meet the financial needs in a short term. Due to limited payment and the same working hours, it is likely to be expected that the employees would be demotivated to businesses, resulting in the higher employee turnover rate.

Another example would be corporate social responsibilities and ethical behaviors. Customers tend to prefer ethical businesses rather than unethical businesses. Businesses could be able to reduce the costs involved in promoting ethical behaviors and corporate social responsibilities. Even though financial factors in ratio analysis and P&L account may seem to be positive, businesses might face declines in revenues in a long term due to behaving unethically.