Deck 4: Ratio Analysis and Financial Performance

Question 1

The ratio which is used to ascertain the soundness of the long term financial position is------------

A)Debt equity ratio
B)Liquidity ratio
C)Activity ratio
D)Gross profit ratio

Answer 1

Debt equity ratio

Question 2

If the current assets and working capital of a company are rs.80,000 and rs.50000 then current liability will be-------------

A)Rs.1,00,000
B)Rs.1,30,000
C)Rs.70000
D)Rs.30000

Answer 2

Rs.30000

Question 3

The ratio which is a good indicator to maintain the correct selling price and efficiency of trading activity is------

A)Net profit ratio
B)Gross profit ratio
C)Current ratio
D)Liquid ratios

Answer 3

Gross profit ratio

Question 4

Return on investment is a----------------

A)Profit and loss account ratio
B)Balance sheet ratio
C)Combined ratio
D)Position statement ratio

Question 5

Debtors turnover ratio also known as----------

A)Payable turnover
B)Receivable turnover ratio
C)Creators turnover ratio
D)Debtors velocity

Question 6

The operating profit and net sale of a firm are rs.2,00,000 and rs.10,00,000 respectively then operating ratio will be

A)20%
B)5%
C)50%
D)20%.

Question 7

The ratio which indicates how quickly debtors are converted into cash is---------

A)Receivable turnover ratio
B)Inventory turnover ratio
C)Working capital turnover ratio
D)Creditors turnover ratio

Question 8

Net capital employed is equal to ---------------

A)Total assets minus liabilities
B)Fixed asset plus net working capital
C)Total asset minus long-term liabilities
D)Total assets

Question 9

Ratio of net profit before interest and tax to sales is------------------------------

A)Solvency ratio
B)Capital gearing
C)Operating profit ratio
D)None of these

Question 10

Lower stock turnover ratio indicates-------------------------------

A)Solvency position
B)Monopoly situation
C)Over investment in inventory
D)None of these

Question 11

Collection of book debts-----

A)Has no effect on current ratio
B)Has decreased in current ratio
C)Has increased in current ratio
D)None of these

Question 12

Debt equity ratio is a--------------------------------------

A)Profitability ratio
B)Turnover ratio
C)Short term solvency ratio
D)Long term solvency ratio

Question 13

Market price per share divided by earnings per share is-------

A)Price earning ratio
B)Return on equity
C)Market test ratio
D)Book value per share

Question 14

Solvency ratio indicates-----------------

A)Credit worthiness
B)Activity
C)Profitability
D)None of these

Question 15

Current ratio shows-----

A)The change in gross profit
B)The working capital position
C)The liquidity of assets
D)The change in net profit

Question 16

Current ratio is 4:1, the amount of current liabilities is Rs.12000 the amount of working capital is-----

A)Rs.48,000
B)Rs.36000
C)Rs.30000
D)Rs.60000

Question 17

Stock turnover ratio is used to determine -----------------------of an enterprise

A)Profitability
B)Liquidity& solvency
C)Efficiency
D)Growth

Question 18

Working capital is expressed as------

A)Current asset-fixed asset
B)Fixed assets-current liabilities
C)Current assets-current liabilities
D)None of these

Question 19

Dividend yield is an example for------ratio

A)Solvency
B)Liquidity
C)Market strength
D)Net worth

Question 20

Debtors turnover ratio is used to calculate------

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

Question 21

Rol measures-----

A)Profitability in relation to investment
B)Profitability in relation to sales
C)Operating efficiency
D)Long term solvency

Question 22

Debtors turnover ratio measures----------

A)Short term solvency
B)Operating efficiency
C)Long term solvency
D)Credit policy

Question 23

Fund flow refers to change in-----

A)Working capital
B)Fixed capital
C)Current capital
D)Increase in working capital

Question 24

Depreciation is sometimes treated as -------of funds

A)Outflow
B)Use
C)Source
D)No change

Question 25

Salary outstanding is----- of funds

A)Source
B)Inflow
C)Application
D)No change