Ratio Analysis Outcomes Quiz

What is one of the outcomes of learning ratio analysis?

• Understanding the history of finance

• Learning to select, calculate, and interpret ratios to assess performance

• Developing marketing strategies

• Studying economic theories

Why are ratios on their own considered meaningless?

• They do not provide any context or comparison.

• They are always incorrect.

• They are too complex to understand.

• They are only used in mathematics.

What does ratio analysis enable in terms of financial performance?

• It allows for the prediction of future stock prices.

• It enables performance to be measured by comparing one piece of financial information with another.

• It guarantees financial success.

• It eliminates the need for financial statements.

Why is the trend over a number of points in time important in ratio analysis?

• It shows the immediate financial status.

• It provides a broader perspective on performance.

• It is easier to calculate.

• It focuses on a single financial event.

Who are the stakeholders interested in ratio analysis?

• Only Managers and Shareholders

• Only Customers and Suppliers

• Managers, Shareholders, Customers, Suppliers, Government, Employees, and Competitors

• Only Government and Employees

What does the liquidity ratio measure?

• How well can we pay our way?

• How much have we borrowed?

• How well are we making profit?

• How much revenue is generated?

What does the gearing ratio indicate?

• How well can we pay our way?

• How much have we borrowed?

• How well are we making profit?

• How much is invested in assets?

What does the profitability ratio assess?

• How well can we pay our way?

• How much have we borrowed?

• How well are we making profit?

• How much is spent on expenses?

What does profitability in ratio analysis generally relate to?

• Profit in relation to sales/assets

• Liquidity ratios

• Shareholder investment

• Gearing ratios

Which of the following is a component of profitability in ratio analysis?

• Profit Margins

• Liquidity Ratios

• Gearing Ratios

• Shareholder Equity