Statement Analysis Tools and Accounting Ratios Test

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Statement Analysis Tools and Accounting Ratios Test - 22

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Weekly Quiz Competition

Question 1
1 / -0

Ratio analysis provides users with crucial financial information and points out the area which require ______.

A
Investigation

B
Finalization

C
Classification

D
Automation

Solution

Ratio analysis reflects the firm's performance in relation to its competitors. It involves comparison of a firm over a period of time, that is, present ratios are compared with past ratios. It indicates the area of investigation i.e. change in the performance, improvements, deterioration etc.
Question 2
1 / -0

Net profit ratio is calculated by ____________.

A
$$\frac{Net profit\times100}{Total sales}$$

B
$$\frac{Net profit\times100}{Total sales - sales return}$$

C
$$\frac{Net profit\times100}{Capital employed}$$

D
None of the above

Solution

The net profit margin, or simply net margin, measures how much net income or profit is generated as a percentage of revenue. It is calculated by the following formula: Net Profit / Net Sales x 100, where Net Sales = Total Sales – Sales Returns.
Question 3
1 / -0

If the cost of goods sold is Rs.$$1$$ lakh the value of opening and closing stock is Rs.$$20,000$$ and Rs.$$30,000$$ respectively the stock turnover ratio will be _____________.

A
$$3.3$$ times

B
$$4$$ times

C
$$5$$ times

D
$$2.3$$ times
Question 4
1 / -0

Acid test ratio is equal to quick current assets divided by ____________.

A
Current liabilities

B
Quick current Liabilities

C
Non-Current Liabilities

D
Contingent liabilities
Question 5
1 / -0

The following group of ratios primarily measures risk ________________.

A
Liquidity, activity, and profitability

B
Liquidity, activity, and common stock

C
Liquidity, activity, and debt

D
Activity, debt, and profitability

Solution

Some of the financial ratios that are most commonly used by the investors and analysis to access a company's financial risk level and overall financial health are debt-to-capital ratio, interest coverage ratio, activity ratio, and profitability ratios.
Question 6
1 / -0

Given - Fixed long term liabilities Rs.$$5,50,000$$ fixed assets Rs.$$12,00,000$$ capital Rs.$$8,50,000$$ Current Liabilities Rs.$$2,50,000$$ current assets Rs.$$4,00,000$$. Debt/equity ratio is _________.

A
$$5$$:$$12$$

B
$$5$$:$$16$$

C
$$11$$:$$17$$

D
$$3$$:$$7$$
Question 7
1 / -0

Which of the following are the objective of ratio analysis?
a. Profitability.
b. Liquidity.
c. Insolvency.
d. Activity level in the business.

A
a, b, and d

B
a, b, and c

C
b, c, and d

D
a, b, c, d

Solution

The main objective of ratio analysis is to show a firm's relative strengths and weaknesses. other objective of of ratio analysis include comparisons for a useful interpretation of financial statements, finding solutions to unfavorable financial statements, activity level and can be measured by calculating liquidity, profitability and solvency ratios.
Question 8
1 / -0

Gross profit ratio is the ratio of ________________.

A
Gross profit to net total sales

B
Gross profit to net credit sales

C
Gross profit to net cash sales

D
Gross profit to net capital sales
Question 9
1 / -0

The ______ ratios are primarily measures of returns.

A
Liquidity

B
Activity

C
Debt

D
Profitability

Solution

Activity ratios are primarily measures of returns. Activity ratios are financial analysis tools used to gauge the ability of a business to convert various assets, liability and capital accounts into cash or sales. The faster a business is able to convert its assets into cash or sales, the more efficient it runs.
Question 10
1 / -0

The ______ measures the activity of a firm's inventory.

A
Average payment period

B
Inventory turnover

C
Average collection period

D
Current ratio

Solution

Inventory turnover ratio measures the activity of a firm's inventory i.e. the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of goods sold divided by the average inventory.

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Re-Attempt Weekly Quiz Competition

Statement Analysis Tools and Accounting Ratios Test - 22

Result

Statement Analysis Tools and Accounting Ratios Test - 22

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SHARING IS CARING

Question 1

Investigation

Finalization

Classification

Automation

Solution

Question 2

$$\frac{Net profit\times100}{Total sales}$$

$$\frac{Net profit\times100}{Total sales - sales return}$$

$$\frac{Net profit\times100}{Capital employed}$$

None of the above

Solution

Question 3

$$3.3$$ times

$$4$$ times

$$5$$ times

$$2.3$$ times

Question 4

Current liabilities

Quick current Liabilities

Non-Current Liabilities

Contingent liabilities

Question 5

Liquidity, activity, and profitability

Liquidity, activity, and common stock

Liquidity, activity, and debt

Activity, debt, and profitability

Solution

Question 6

$$5$$:$$12$$

$$5$$:$$16$$

$$11$$:$$17$$

$$3$$:$$7$$

Question 7

a, b, and d

a, b, and c

b, c, and d

a, b, c, d

Solution

Question 8

Gross profit to net total sales

Gross profit to net credit sales

Gross profit to net cash sales

Gross profit to net capital sales

Question 9

Liquidity

Activity

Debt

Profitability

Solution

Question 10

Average payment period

Inventory turnover

Average collection period

Current ratio

Solution

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