Statement Analysis Tools and Accounting Ratios Test

Result

Statement Analysis Tools and Accounting Ratios Test - 37

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Weekly Quiz Competition

Question 1
1 / -0

The ability of a company to meet its short-term obligations known as .

A
Liquidity

B
Solvency

C
Profitability

D
Trading on equity

Solution

Liquidity refers to both an enterprise's ability to pay short-term obligations and a company's capability to sell assets quickly to raise cash.
Question 2
1 / -0

Return on share holder's funds being much higher than the overall return on investment indicated by ______________.

A
Debt-Equity ratio

B
Debtors turnover ratio

C
Debt collection period

D
None of these
Question 3
1 / -0

Capacity ratio X Efficiency ratio = .

A
Activity Ratio

B
Capacity Ratio

C
Efficiency Ratio

D
None of these

Solution

Capacity ratio X Efficiency ratio = Activity ratio
If Capacity ratio = $$90\%$$ , Efficiency ratio = $$85\%$$ , then
Activity ratio = $$90/100$$ x $$85/100$$
= $$76.5\%$$
Question 4
1 / -0

Inability to pay dues to financial institution is measured by .

A
Debt coverage ratio

B
Fixed charge coverage ratio

C
Debtors turnover ratio

D
Creditors turnover ratio

Solution

Debt coverage ratio shows the firms ability to pay off current interest and installments.
Debt coverage ratio = [Net profit (after tax ) + Non-tax expenses] / [Interest liabilities + Installments]
For example if the ratio is $$3 : 1$$ it means that the firm is making returns to the extent that they can make the payments to institutions three times, which gives a very good assurance to the lenders.
Question 5
1 / -0

Given current ratio = $$2.5$$
Quick ratio = $$1.5$$
Net working capital = Rs $$30,000$$
What is the amount of current liabilities?

A
$$Rs20,000$$

B
$$Rs30,000$$

C
$$Rs50,000$$

D
$$Rs60,000$$

Solution

Net working capital = Current assets - Current liabilities
$$Rs. 30000$$ = Current assets - Current liabilities
Therefore, Current assets = Current liabilities + $$Rs. 30000$$
Current ratio = Current assets/ Current liabilities
$$2.5$$ = [Current liabilities + $$Rs. 30000$$] / Current liabilities
$$2.5$$ Current liabilities = Current liabilities + $$Rs. 30000$$
Current liabilities = $$Rs. 30000/ 1.5$$
Therefore, Current liabilities = $$Rs. 20000$$
Question 6
1 / -0

The ________ classification has been on the basis of financial statements to which the determinants of ratios belong.

A
Modern

B
Traditional

C
Functional

D
None of the above

Solution

In Traditional classification the basis is the financial statement to which the determinants belong. For example balance sheet ratios, profit and loss ratios etc.
Question 7
1 / -0

A ratio of two variables from the income statement is known as __________ ratio.

A
Composite

B
Balance sheet

C
Income statement

D
Liquidity

Solution

A ratio of two variable from the income statement is known as income statement ratio. For example Gross profit ratio which is the ratio of Gross profit to Sales, here both the figures are from income statement.
Question 8
1 / -0

Quick assets include which of the following?

A
Cash

B
Accounts Receivable

C
Inventories

D
Only (a) and (b)

Solution

Quick assets are assets that can be converted to cash quickly. Typically, they include cash, accounts receivable, marketable securities, and sometimes (not usually) inventory.
Question 9
1 / -0

If gross profit ratio is $$33.33\%$$ sales, it is ____________$$\%$$ on cost.

A
$$33.33\%$$

B
$$20\%$$

C
$$25\%$$

D
$$50\%$$

Solution

Assume Sale = $$300$$ and Gross profit = $$33.33\% $$ on sales = $$100$$
Cost + Gross profit = Sales
Cost + $$100$$ = $$300$$
Cost = $$200$$
Now, Gross profit % on Cost = Gross Profit x $$100$$
Cost
= [$$100/200$$ ] x $$100$$
= $$50\%$$.
Question 10
1 / -0

Accounting information is dependent on the _________.

A
person who is making it

B
data that has been taken

C
both a & b

D
none of the above

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Re-Attempt Weekly Quiz Competition

Statement Analysis Tools and Accounting Ratios Test - 37

Result

Statement Analysis Tools and Accounting Ratios Test - 37

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Rank

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SHARING IS CARING

Question 1

Liquidity

Solvency

Profitability

Trading on equity

Solution

Question 2

Debt-Equity ratio

Debtors turnover ratio

Debt collection period

None of these

Question 3

Activity Ratio

Capacity Ratio

Efficiency Ratio

None of these

Solution

Question 4

Debt coverage ratio

Fixed charge coverage ratio

Debtors turnover ratio

Creditors turnover ratio

Solution

Question 5

$$Rs20,000$$

$$Rs30,000$$

$$Rs50,000$$

$$Rs60,000$$

Solution

Question 6

Modern

Traditional

Functional

None of the above

Solution

Question 7

Composite

Balance sheet

Income statement

Liquidity

Solution

Question 8

Cash

Accounts Receivable

Inventories

Only (a) and (b)

Solution

Question 9

$$33.33\%$$

$$20\%$$

$$25\%$$

$$50\%$$

Solution

Question 10

person who is making it

data that has been taken

both a & b

none of the above

User

Question Analysis

My Perfomance

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