ACCOUNTING RATIOS - 1

Liquid Assets do not include:

• (a) Bills Receivable

• (b) Debtors

• (c) Inventory

• (d) Bank Balance

The ………………of a business firm is measured by its ability to satisfy its short term obligations as they become due.

• (a) Activity

• (b) Liquidity

• (c) Debt

• (c) Debt

Quick Ratio is also known as:

• (a) Liquid Ratio

• (b) Current Ratio

• (c) Working Capital Ratio

• (d) None of the Above

Trade Receivables ₹ 40,000; Trade Payables ₹ 60;000; Prepaid Expenses ₹ 10,000; Inventory ₹ 1,00,000 and Goodwill is ₹ 15,000, Current Ratio will be:

• (a) 1:2

• (b) 2:1

• (c) 2.33:1

• (d) 2.5:1

Current Assets ₹ 4, 00,000; Current Liabilities ₹ 2, 00,000 and Inventory is ₹ 50,000. Liquid Ratio will be:

• (a) 2:1

• (b) 2.25:1

• (c) 4:7

• (d) 1.75:1

Which of the following transactions will improve the quick ratio?

• (a) Sale of goods for cash

• (b) Sale of goods on credit

• (c) Issue of new shares for cash

• (d) All of the above

A Company’s Current Ratio Assets are ₹ 8, 00,000 and its current liabilities are ₹ 4, 00,000. Subsequently, it purchased goods for ₹ 10, 00,000 on credit. Current ratio will be……………….

• (a) 2:1

• (b) 2.25:1

• (c) 1.8:1

• (d) 1.6:1

Current Assets of a Company were ₹ 1, 00,000 and its current Ratio was 2:1. After this the company paid ₹ 25,000 to its Trade payable. The Current Ratio after the payment will be:

• (a) 5:1

• (b) 2:1

• (c) 3:1

• (d) 4:1

A Company’s liquid assets are ₹ 10, 00,000 and its current liabilities are ₹ 8, 00,000. Subsequently, it purchased goods for ₹ 1, 00,000 on credit. Quick ratio will be ………………

• (a) 1.11:1

• (b) 1.22:1

• (c) 1.38:1

• (d) 1.25:1

The …………… is a measure of liquidity which excludes ………………..generally the least liquid asset.

• (a) Current ratio, Accounts receivable

• (b) Liquid ratio, Accounts receivable

• (c) Current ratio, inventory

• (d) Liquid ratio, inventory