The Five Ratios Quiz

How are accounting ratios used by accountants?

• To prepare financial statements

• To analyze financial health

• To conduct audits

• To manage payroll

The type of ratio for Current Ratio is:

• Liquidity Ratio

• Profitability Ratio

• Efficiency Ratio

• Leverage Ratio

What does the Current Ratio measure?

• The ability of a company to pay its short-term obligations with its short-term assets.

• The profitability of a company over a specific period.

• The long-term growth potential of a company.

• The market share of a company in its industry.

What is the formula for Current Ratio?

• Current Assets / Current Liabilities

• Current Liabilities / Current Assets

• Total Assets / Total Liabilities

• Total Liabilities / Total Assets

What is the interpretation range for Current Ratio?

• 0.5 to 1.5

• 1.5 to 3

• 3 to 5

• Above 5

What is the type of ratio for Solvency Ratio?

• Liquidity Ratio

• Profitability Ratio

• Efficiency Ratio

• Debt to Asset Ratio

The Solvency Ratio measures:

• a company's ability to meet its long-term debts

• the profitability of a company

• the liquidity of a company

• the market share of a company

The interpretation range for Solvency Ratio is:

• 0% to 20%

• varies by industry

• 40% to 60%

• Above 60%

The type of ratio for Profit Margin Ratio is:

• Liquidity Ratio

• Profitability Ratio

• Efficiency Ratio

• Leverage Ratio

The Profit Margin Ratio measures:

• the total revenue of a company.

• how efficient a company is in making profit.

• the total expenses of a company.

• the gross income of a company.