Deck 3: Ratio Analysis and Financial Metrics in Business

Question 1

The asset, the amount of which can be realized within a period of one year are known as ----------------

A)Current liability
B)Current asset
C)Liquid liability
D)Fixed asset

Answer 1

Current asset

Question 2

The ideal current ratio is -------------

A)2:1
B)1:1
C)1:2
D)1:3

Answer 2

2:1

Question 3

The ratio which shows the relationship between borrowed funds and owners capital is ---------------

A)Proprietary ratio
B)Debt equity ratio
C)Capital gearing ratio
D)Fixed asset ratio

Answer 3

Debt equity ratio

Question 4

Proprietary ratio measures the relationship between share holder fund and ------------------

A)Total asset
B)Fixed asset
C)Current asset
D)Fictious asset

Question 5

The relationship between total outside liabilities and total assets can be indicated through ------------

A)Fixed asset ratio
B)Solvency ratio
C)Fixed asset turn over ratio
D)Proprietary ratio

Question 6

Debt service ratio is also known as --------------

A)Interest coverage ratio
B)Dividend payout ratio
C)Solvency ratio
D)Debtors turn over ratio

Question 7

Debt equity ratio is an example of ---------------- ratios

A)Balance sheet ratio
B)Profit & loss account ratio
C)Mixed ratio
D)Liquidity ratio

Question 8

Income tax payable come under ------------------

A)Long term liability
B)Long term fund
C)Current liability
D)Other liabilities

Question 9

Stock and prepaid expanses are not included in ----------------

A)Current asset
B)Fixed asset
C)Current liability
D)Quick asset

Question 10

In a sound business, acid test ratio ------------------- is considered satisfactory

A)1:2
B)2:1
C)1:1
D)0.5:1

Question 11

Cost of good sold+operating expanses=-------------------------

A)Total cost
B)Cost of product
C)Cost of sales
D)Operating cost

Question 12

Example of activity ratios ------------------------

A)Gross profit ratio
B)Net profit ratio
C)Operating ratio
D)Stock turn over ratio

Question 13

Example of leverage ratio

A)Debtors velocity
B)Stock turnover ratio
C)Current ratio
D)Solvency ratio

Question 14

Current ratio is an example of --------------------

A)Leverage ratio
B)Liquidity ratio
C)Activity ratio
D)Turnover ratio

Question 15

Stock turn over ratio is an example of -------------------

A)Liquidity ratio
B)Leverage ratio
C)Profitability ratios
D)Activity ratios

Question 16

Ratio analysis is a study of relationship among various --------------- factors in a business

A)Operational
B)Official
C)Financial
D)Others

Question 17

Liquidity ratios measure the --------- solvency of a firm

A)Long term
B)Short term
C)Average
D)Others

Question 18

By computing current ratio ---------------- solvency of a concern is assessed

A)Short term
B)Long term
C)Liquidity
D)Profitability

Question 19

---------------- ratio studies the firm's ability to meet its long term financial position

A)Liquidity ratio
B)Profitability
C)Activity
D)Leverage

Question 20

Satisfactory level of debt equity ratio is --------------------

A)1:1
B)3:1
C)2:1
D)1:2

Question 21

Operating ratio establishes the relationship between --------------- and net sales

A)Cost of goods sold
B)Cost of sales
C)Cost of production
D)Operating cost

Question 22

For dividend yield ratio -------------- price of the equity shares is taken into consideration

A)Market
B)Cash
C)Cost
D)None of the above

Question 23

Coverage of fixed assets by shareholder's equity is a good tests of----------------

A)solvency
B)liquidity
C)Activity
D)profitability

Question 24

Net worth refers to owner's--------------------------

A)Equity
B)Solvency
C)Liability
D)None of these

Question 25

Ratio to assess the short term debt paying capacity of a firm is----------

A)Debt equity ratio
B)Propriety ratio
C)Liquid ratio
D)Solvency ratios