Ratios Questions

Match List - I with List - II.

Choose the correct answer from the options given below:

Aradya Ltd. maintains a Debt-Equity ratio of $2.5:1$. Which of the following transactions will not affect its Debt-Equity Ratio?

Net Capital Employed is mathematically equivalent to which of the following expressions?(A) Fixed Assets + Current Assets - Long-term liabilities(B) Non-current Assets + Current Assets - Current liabilities(C) Fixed Assets + Current Assets - Equity(D) Equity + Debt(E) Current Assets - Current liabilitiesChoose the correct answer from the options given below:

The ratios calculated to measure the short term commitments of business is:

Which of the following transactions will increase the Current Ratio but will decrease the Debt Equity Ratio?

A trader carries an average inventory of Rs. 40,000. His inventory turnover ratio is 8 times. If he sells goods at a profit of 20% on Revenue from operations, find out the gross profit.

The ratio in which the old partners agree to give their share of profit in favor of the incoming partner is called:

Match List-I with List-II:List-I (Ratio Category)List-II (Specific Ratio Example)(A) Liquidity Ratio(I) Interest Coverage Ratio(B) Profitability Ratio(II) Acid-Test Ratio(C) Solvency Ratio(III) Fixed Assets Turnover Ratio(D) Activity Ratio(IV) Return on Capital Employed RatioChoose the correct answer from the options given below:

Which of the following is NOT classified as a Profitability Ratio?

Consider the following data: Net Profit after tax is Rs. 60,000; 12% Long-term debt is Rs. 20,000,000; and the Tax rate is 40%.Arrange the steps in the correct chronological sequence to calculate the Interest Coverage Ratio:(A) Calculate Net Profit before tax(B) Divide Net Profit before Interest and Tax by Interest on long-term debt(C) Calculate Net profit before interest and tax(D) Calculate Interest on Long-term DebtChoose the correct answer from the options given below:

On the basis of the information given below, find the value of the Closing Inventory:
$$\text{Opening Inventory}=\text{Rs. }20,000$$
$$\text{Average Inventory}=\text{Rs. }40,000$$

The following accounting ratios primarily measure a firm's operational or structural risk:(A) Liquidity(B) Activity(C) Debts(D) ProfitabilityChoose the correct answer from the options given below:

X Ltd. has a current ratio of 3:1 and quick ratio of 2:1. If excess of current assets over quick assets, represented by inventories is Rs. 5,000, calculate current assets and quick assets.

In the event of the death of a partner, the ratio in which the continuing partners acquire the share from the deceased partner is called .......

Match List-I with List-IIList-I(Accounting ratio)List-II(Type of accounting ratio)(A) Current ratio(I) Liquidity ratios(B) Stock turnover ratio(II) Activity ratios(C) Debt Equity ratio(III) Solvency ratios(D) Operating ratio(IV) Profitability ratiosChoose the correct answer from the options given below:

Gross profit ratio of a company was 25%, its credit revenue from operations was Rs. 20,00,000 and its cash revenue from operations was 20% of the total revenue from operations. If the indirect expenses of the company was Rs. 50,000. Calculate its net profit.

Based on the case study details provided, calculate the Price/Earnings (P/E) Ratio:

Based on the case study details provided, determine the Return on Investment (ROI) for the firm:

Based on the case study details provided, find the Earnings Per Share (EPS) for the equity stockholders:

Based on the case study details provided, calculate the Return on Shareholders' Funds:

Match List-I with List-II regarding the core accounting metrics and concepts across various partnership events:List-I (Accounting Metrics)List-II (Partnership Event)(A) Sacrificing ratio(I) Dissolution of Partnership(B) Gaining Ratio(II) Admission of a New Partner(C) Executors Account(III) Retirement of a Partner(D) Realisation Account(IV) Death of a PartnerChoose the correct answer from the choices given below:

The current ratio is $2.5:1$. Current assets are $\text{Rs. }50,000$ and current liabilities are $\text{Rs. }20,000$. How much must be the reduction in the current assets to bring the ratio to $2:1$

Match List-I with List-IIList-IList-II(A) Liquidity Ratio(II) Quick Ratio(B) Solvency Ratio(III) Proprietary Ratio(C) Activity Ratio(I) Trade payable Turnover Ratio(D) Profitability Ratio(IV) Price earning ratioChoose the correct answer from the options given below:

Which of the following statements are True about ratio analysis-(A) A ratio reflects quantitative and qualitative aspects of results.(B) Long-term borrowings are concerned about the ability of a firm to discharge its obligations to pay interest and repay the principal amount(C) A ratio is always expressed as a quotient of one number divided by another.(D) Ratios help in comparisons of a firm's results over a number of accounting periods as well as with other business enterprises.Choose the correct answer from the options given below:

_________ are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

The ratio in which the continuing partners have acquired the share from the retiring/deceased partner is called:

The current ratio of a firm is $2:1$. What will be the impact of purchasing goods on credit on this ratio?

Match List-I with List-II:List-IList-II(A) Measure of liquidity(I) Return on capital employed(B) Measure of earning capacity(II) Inventory turnover ratio(C) Measure of activity of firm's inventory(III) Profitability ratio(D) Measure of Productive efficiency of funds(IV) Current ratioChoose the correct answer from the options given below:

Compute Earning per share (EPS) from the following information:Net profit after tax but before dividend: $\text{Rs. }1,75,000$ Equity shares of $\text{Rs. }10$ each: $\text{Rs. }7,00,000$ Dividend declared: @ $15\%$ Market price of a share: $\text{Rs. }13$

To assess the long-term solvency of a business, which of the following ratios are used?(A) Interest coverage ratio(B) Proprietary ratio(C) Acid test ratio(D) Debt to capital employed ratioChoose the correct answer from the options given below:

Calculate the Gross Profit Ratio from the following information:Revenue from operations: $\text{Rs. }3,40,000$ Cost of revenue from operations: $\text{Rs. }1,20,000$

Match List-I with List-IIList–IList–II(A) Profitability Ratios(I) This refers to the ratios that are calculated for measuring the efficiency of operations of a business based on effective utilization of resources.(B) Activity Ratios(II) The ability of a business to pay the amount due to stakeholders as and when it is due.(C) Liquidity Ratios(III) The ability to meet its contractual obligations towards stakeholders, particularly towards external stakeholders.(D) Solvency Ratios(IV) It refers to the analysis of profits in relation to revenue from operations or funds (or assets) employed in the business.Choose the correct answer from the options given below:

Match List-I with List-IIList-I (Ratio Group)List-II (Specific Ratio Example)(A). Liquidity Ratio(I). Receivable Turnover Ratio(B). Solvency Ratio(II). Quick Ratio(C). Activity (or Turnover) Ratio(III). Earning Per Share Ratio(D). Profitability Ratio(IV). Debt to Equity RatioChoose the correct answer from the options given below:

Calculate the Current Ratio from the following information:ParticularsValue (Rs.)Inventories50,000Trade receivables50,000Advance tax4,000Cash and cash equivalent30,000Trade payables1,00,000Short-term borrowings (bank overdraft)4,000

Which technique is used to assess profitability, solvency and efficiency of an enterprise through quantitative mathematical relationship variables?

Calculate the 'Liquid Ratio' from the following information:ItemsValue (Rs.)Current liabilities50,000Current assets80,000Inventories20,000Advance tax5,000Prepaid expenses5,000

The current ratio of a firm is $2:1$ and the quick ratio is $1:1$. If liabilities are Rs. $1,00,000$, find the value of working capital.

Based on Case Study 1, find the value of total Trade Payables.

The two basic measures of liquidity are:

The ________ ratios are primarily designed to measure the operational returns and financial yield performance of an enterprise.

Given: Revenue from operations = $\text{Rs }4,00,000$, Average Inventory = $\text{Rs }55,000$, and Gross Profit Ratio = $10\%$. Calculate the Inventory Turnover Ratio.

Which of the following ratios is classified as a solvency ratio?

A trader carries an average inventory of $\text{Rs. }60,000$. His inventory turnover ratio is $12$ times. If he sells goods at a profit of $20\%$ on revenue from operations (sales), calculate the value of gross profit.

Profit after tax and interest is $\text{Rs. }1,60,000$. The tax rate is $20\%$. $10\%$ long term borrowing is $\text{Rs. }20,00,000$. Find the profit before tax and after interest.

Match List-I with List-II:List-I (Ratio)List-II (Formula)(A) Current ratio(I) Market Price of a share / EPS(B) Operating Margin Ratio(II) Current Assets / Current Liabilities(C) Return on Capital employed(III) 100 - Operating Ratio(D) Price earning ratio(IV) $\frac{\text{Profit before interest and tax}}{\text{Capital employed}}\times 100$ Choose the correct answer from the options given below:

The standard Debt-Equity ratio is:

The ideal quick ratio is:

Given the following information:ParticularsAmount (Rs.)Revenue from Operations3,40,000Cost of Revenue from Operations1,20,000Selling expenses80,000Administrative Expenses40,000Calculate Operating ratio.

Which of the following are the objectives of Ratio Analysis?(A) To know the areas of the business which need more attention.
(B) To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the business.
(C) To know about the potential areas which can be improved with the effort in the desired direction.
(D) To provide information derived from financial statements useful for making projections and estimates for the future.Choose the correct answer from the options given below:

Long-term solvency is indicated by:

If there are Fixed assets of ₹10,00,000, Current assets of ₹6,00,000, Current liabilities of ₹3,00,000 and Net profit before Interest and Tax of ₹2,60,000; then Return on Investment will be:

Match List - I with List - II

Choose the correct answer from the options given below:

Calculate Current Ratio from the following given information.Liquid Ratio $0.75:1$ Current Liabilities Rs. 1,80,000Prepaid Expenses Rs. 20,000Inventory Rs. 47,250

Make the right combination of the ratios that enables to find the short term liquidity.(a) Return on Equity(b) Acid Test Ratio(c) Current Ratio(d) Sacrificing Ratio(e) Inventory Turnover RatioChoose the most appropriate answer from the options given below:

When the ratio is low, the firm is said to have favourable indication.

Current ratio is $2:5$, current liabilities Rs. $25,000$, the amount of current assets will be:

Debt-equity ratio is a sub-part of:

Collections from book debts:

A low stock turnover ratio indicates:

Which one higher ratio is not favourable?

Which of the following ratios is not a profitability ratio?

What is Gross Profit Ratio if?Total sales Rs. $6,00,000$ Sales returns Rs. $50,000$ Cost of goods sold Rs. $4,40,000$

What is gross profit ratio?Gross sales Rs. $7,60,000$ Sales returns Rs. $40,000$ Net Profit after interest Rs. $40,000$ Indirect expenses Rs. $60,000$ Interest paid on debentures Rs. $20,000$

Operating Profit Ratio of XYZ Ltd. is $60\%$. The operating ratio of XYZ Ltd. is:

Match List I with List II

Choose the correct answer from the options given below:

Earning Capacity of a Company is measured by:

X Ltd. has a Current Ratio of $3.5:1$ and Quick Ratio of $2:1$. If excess of current assets over quick assets represented by inventories is Rs. $24,000$. Calculate current liabilities.

For calculating EPS, the following order will be followed.(A) Calculate number of equity shares(B) Calculate earning available for equity share holders(C) Compute profit after tax(D) Compute EPSChoose the correct answer from the options given below :

The ideal Debt Equity Ratio is :

If there is Revenue from Operation Rs. $1,20,000$ and gross profit is $20\%$ of cost, then the amount of gross profit will be :

What are the different types of liquidity ratiosA. Interest coverage ratioB. Current ratioC. Inventory turnover ratioD. Gross profit ratioE. Acid test ratio Choose the correct answer from the options given below:

Consider the following financial metrics of a firm:Total Assets = Rs. $3,00,000$ Non-current Liabilities = Rs. $80,000$ Shareholders' Fund = Rs. $2,00,000$ Fixed Assets = Rs. $1,60,000$ Non-current Investments = Rs. $1,00,000$ The Current Ratio of the firm is:

Based on Case Study 1, find the Trade Receivables Turnover Ratio.

Based on Case Study 1, what is the Trade Payables Turnover Ratio?

Which one of the following statements is true?

Based on Case Study 1, find the Average Payment Period.

Based on Case Study 1, find the Average Collection Period.

Match List-I with List-II based on standard financial ratio classifications:List-IList-II(A) Liquidity Ratios(I) Debt to Capital Employed Ratio(B) Solvency Ratios(II) Net profit ratio(C) Activity Ratios(III) Current Ratio(D) Profitability Ratios(IV) Working capital Turnover RatioChoose the correct answer from the options given below:

Calculate the Current Ratio from the following financial data:ParticularsAmount (in Rs.)Inventories$60,000$ Trade receivables$60,000$ Advance tax$4,000$ Cash and cash equivalents$50,000$ Trade payables$1,30,000$ Bank Overdraft$4,000$

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories$50,000$ Trade Receivables$50,000$ Advance Tax$4,000$ Cash and Cash Equivalents$30,000$ Trade Payables$1,00,000$ Bank overdraft$4,000$ Question: Quick Ratio (Liquid Ratio) of the firm is:

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories$50,000$ Trade Receivables$50,000$ Advance Tax$4,000$ Cash and Cash Equivalents$30,000$ Trade Payables$1,00,000$ Bank overdraft$4,000$ Question: Current Ratio of the firm is:

Comprehension:Consider the following account balance particulars of a firm:ParticularsAmount (Rs.)Inventories$50,000$ Trade Receivables$50,000$ Advance Tax$4,000$ Cash and Cash Equivalents$30,000$ Trade Payables$1,00,000$ Bank overdraft$4,000$ Question: Quick Assets of the firm are:

The _________ may indicate that the firm is experiencing stockouts and lost sales.

Match List-I with List-II:List-I(A) Liquidity Ratio(B) Solvency Ratio(C) Activity (or Turnover) Ratio(D) Profitability RatioList-II(I) Inventory Turnover ratio(II) Quick Ratio(III) Price earning ratio(IV) Total asset to debt ratioChoose the correct answer from the options given below:

Match List I with List II: \begin{tabular}{|l|l|}\hline\textbf{LIST I} & \textbf{LIST II} \ \hlineA. Operating Profit Ratio & I. Solvency Ratios \ \hlineB. Working Capital Turnover Ratio & III. Activity Ratios \ \hlineC. Debt-Equity Ratio & III. Activity Ratios \ \hlineD. Quick Ratio & IV. Profitability Ratios \ \hline\end{tabular} Choose the correct answer from the options given below:

Match List - I with List - II.
$$\begin{array}{ll}\text{List - I}& \text{List - II}\\ \text{(A) Profits of firm after admission of partner}& \text{(I) Sacrificing Ratio}\\ \text{(B) Goodwill brought in by new partner}& \text{(II) Old Ratio}\\ \text{(C) Profit on revaluation}& \text{(III) Gaining Ratio}\\ \text{(D) Retiring Partner’s Share of Goodwill}& \text{(IV) New Ratio}\end{array}$$
Choose the correct answer from the options given below:

What will be Interest Coverage Ratio, when $20\%$ Long term Debt is Rs. $10,00,000$, Tax Rate $40\%$ and Net profit After Tax is Rs. $6,00,000$.

Identify the other name by which Liquid ratio is known:

Identify the ratio out of the following options which is not computed for evaluating the long-term solvency of a business.

Every company analyses its earning capacity of the business which is an outcome of utilisation of resources employed in the business. To analyse profitability, a company can use:A. Dividend Payout RatioB. Return on Net WorthC. Gross Profit RatioD. Quick RatioE. Inventory Turnover RatioChoose the correct answer from the options given below:

Match List - I with List - II.
$$\begin{array}{ll}\text{List - I (Accounting Ratios)}& \text{List - II (Functional Classification)}\\ \text{(A) Current Ratio}& \text{(I) Solvency Ratios}\\ \text{(B) Inventory Turnover Ratio}& \text{(II) Liquidity Ratios}\\ \text{(C) Return on Investment}& \text{(III) Profitability Ratios}\\ \text{(D) Proprietary Ratio}& \text{(IV) Activity Ratios}\end{array}$$
Choose the correct answer from the options given below:

Match List I with List II regarding accounting ratios and their descriptions:List I (Ratios)List II (Descriptions)A. Debt-Equity RatioI. Primarily indicates the rate of external funds in financing assets.B. Total assets to Debt ratioII. Higher proportion provides security to creditors.C. Proprietary ratioIII. It reveals the efficiency of business in utilization of funds.D. Return on InvestmentIV. It measures the degree of indebtedness of an enterprise.Choose the correct answer from the options given below:

Make the right combination of ratios that enables to find the short-term liquidity of a firm:A. Return on EquityB. Acid Test RatioC. Sacrificing RatioD. Inventory Turnover RatioE. Current RatioChoose the correct answer from the options given below: