Statement Analysis Tools and Accounting Ratios Test

Result

Statement Analysis Tools and Accounting Ratios Test - 8

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Weekly Quiz Competition

Question 1
1 / -0

Shareholders’ Funds + Non-current Liabilities = ?

A
Current Liabilities

B
Capital Employed

C
Share Capital

D
Total Debt

Solution

It is the value of all the assets employed in a business and can be calculated by adding fixed assets to working capital or subtracting current liabilities from total assets.
Question 2
1 / -0

From the following, identify the item which will help in increasing the Debt to Equity Ratio?

A
Redemption of debentures in cash

B
Issue of debentures for cash

C
Issue of Equity Shares

D
Purchase of Intangible Assets

Solution

Issue of debentures will increase debt and no change in equity. So it will increase the debt equity ratio
Question 3
1 / -0

Revenue from operations is not used in the calculation of __________

A
Operating Ratio

B
Net Profit Ratio

C
Gross Profit Ratio

D
Trade Payable Turnover Ratio

Solution

Revenue from operations ie., net sales is not used in calculating trade payable turnover ratio. It is calculated by taking the total purchases made from suppliers and dividing it by the average account payable amount during the same period.
Question 4
1 / -0

Average Inventory is used to calculate the …….

A
Inventory Turnover Ratio

B
Current Ratio

C
Interest Coverage Ratio

D
Debt Equity Ratio

Solution

Average inventory is the mean value of an inventory throughout a certain time period. In inventory turnover ratio is calculated by dividing the cost of goods sold for a period by the average inventory for that period.
Question 5
1 / -0

Current Liabilities are not required to calculate the ……..

A
Both Current Ratio and Quick Ratio

B
Current Ratio

C
Interest Coverage Ratio

D
Quick Ratio

Solution

Interest coverage ratio is calculated by dividing a company's earnings before interest and taxes by the company's interest expenses for the same period.

Question 6

1 / -0

Match the following

a) Operating profit ratio	i) Relationship between operating profit and net sale
b) Operating ratio	ii) Relationship between gross profit to net sales
c) Gross profit	iii) Relationship between operating cost and net sale

a(i), b(iii), c(ii)

a(ii), b(iii), c(i)

a(i), b(ii), c(iii)

a(iii), b(i), c(ii)

Solution

The operating profit ratio indicates how much profit a company makes after paying for variable costs of production such as wages , raw materials etc. It is expressed as a percentage of sales and shows the efficiency of a company controlling costs and expenses associated with business operations

Operating ratio is a company's operating expenses as a percentage of revenue.

Gross profit ratio is used to assess a company's financial health and business model by revealing the proportion of money left over from revenues after accounting for the cost of goods sold

Question 7
1 / -0

XYZ Company's total current assets are ₹10,000,000 and its total current liabilities are ₹8,000,000 then its current ratio would be

A
1.25 : 1

B
2:1

C
1:50

D
1:2

Solution

Current Ratio = 1.25
i.e. Current Ratio = Current Assets/Current Liabilities
Current Ratio = 10,000,000/8000000 = 1.25
Question 8
1 / -0

Quick Ratio of Vinod Limited is 1.5:1. Company pays dividend ₹28,000 to its shareholders. What will be the impact on Quick Ratio?

A
No change

B
Dividend is not concerned with Quick Ratio

C
Ratio will increase

D
Ratio will decrease

Solution

The Quick Ratio will increase because both quick assets and current liabilities will decrease ie., cash and dividend liability will decrease by that much amount
Question 9
1 / -0

From the following, calculate Inventories turnover ratio— Net Revenue from operations –₹2,00,000 Gross Profit = 25% , Opening Inventories = ₹5000, Inventories at the end -₹15000

A
5 times

B
15 times

C
25 times

D
10 times

Solution

Inventory Turnover Ratio = 15 Times
Cost of Revenue from operations = 2,00,000 – (25% of Net Revenue from operations) = 1,50,000
Average inventory = 5,000 + 15,000 = 20,000/2 = 10,000
Inventory turnover ratio = 1,50,000/10,000 = 15
Question 10
1 / -0

The Current Ratio of Vinod Limited is 2:1. Company purchased a Computer by paying cash for office use. What will be the effect on Ratio?

A
No change

B
Decrease

C
Increase

D
Nil

Solution

Cash is paying so current assets will decrease as a result current ratio is also decrease.

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Re-Attempt Weekly Quiz Competition

Statement Analysis Tools and Accounting Ratios Test - 8

Result

Statement Analysis Tools and Accounting Ratios Test - 8

Score

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Rank

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SHARING IS CARING

Question 1

Current Liabilities

Capital Employed

Share Capital

Total Debt

Solution

Question 2

Redemption of debentures in cash

Issue of debentures for cash

Issue of Equity Shares

Purchase of Intangible Assets

Solution

Question 3

Operating Ratio

Net Profit Ratio

Gross Profit Ratio

Trade Payable Turnover Ratio

Solution

Question 4

Inventory Turnover Ratio

Current Ratio

Interest Coverage Ratio

Debt Equity Ratio

Solution

Question 5

Both Current Ratio and Quick Ratio

Current Ratio

Interest Coverage Ratio

Quick Ratio

Solution

Question 6

a(i), b(iii), c(ii)

a(ii), b(iii), c(i)

a(i), b(ii), c(iii)

a(iii), b(i), c(ii)

Solution

Question 7

1.25 : 1

2:1

1:50

1:2

Solution

Question 8

No change

Dividend is not concerned with Quick Ratio

Ratio will increase

Ratio will decrease

Solution

Question 9

5 times

15 times

25 times

10 times

Solution

Question 10

No change

Decrease

Increase

Nil

Solution

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