RATIOS

Which ratio uses the formula (gross profit/sales revenue) x 100?

• Gross Profit % ratio

• Profit for the Year % ratio

• Return on Equity Employed ratio

Which of the following is a method for a business to improve their Profit for the Year percentage?

• Increase the selling price of the product

• Reduce expenses

• Decrease the gross profit figure

Which of the following formulas is referred to as Return on Equity employed?

• (Profit for the year/Opening Equity) x 100

• (Profit for the year/Sales revenue) x 100

• (Gross Profit /Sales revenue) x 100

Which of the following will often use Return on Equity employed?

• Trustees

• Venture Capitalists

• Manufacturers

Which of the following ratios is referred to as a Current Ratio?

• (Current assets - closing inventory) : Current liabilities

• Current assets : current liabilities

• cost of sales : average inventory

What is the ideal value for a current ratio:

• 2:1

• 1:2

• 1:1

Which of the following formulas is referred to as the acid test formula?

• (current assets - closing inventory) : current liabilities

• current assets : current liabilities

• cost of sales : average inventory

What is the ideal value for an acid test ratio?

• 2:1

• 1:1

• 1:4

Which ratio uses the formula: cost of sales/average inventory

• Rate of inventory turnover

• Acid Test ratio

• Gross profit percentage

Which of the following is a purpose of ratio analysis?

• Measuring the human element of a business

• Taking external factors into account

• Identifying issues that can be resolved