Worksheets3.5 BM - profitability, liquidity ratios
Total questions: 20
Worksheet time: 14mins
Profitability ratios are important to who?
Customer
Owner
Board members
A Business Has The Following:
Fixed Assets = £6000
Current Assets = £2000
Inventory = £1000
Current Liabilities = £500
Calculate It's Current Ratio
1 : 4
1 : 5
1 : 2
1 : 3
1 : 6
What is the correct definition of Positive Liquidity
A business has enough cash to pay off their liabilities.
A business does not have enough cash to pay off their liabilities.
A business has enough fixed assets to sell in order to pay off their current liabilities
A business has a greater amount of fixed assets than current assets.
A business has more money going going to creditors than it is receiving from debtors.
What is the correct calculation for the liquid capital ratio?
Gross Profit / Turnover * 100
Net Profit / Turnover * 100
Total Current Assets / Total Current Liabilities
(Current Assets - Inventory) / Current Liabilities
A Business Has The Following:
Fixed Assets = £6000
Current Assets = £2000
Inventory = £1000
Current Liabilities = £500
Calculate It's Liquid Capital Ratio
1 : 2
1 : 12
1 : 4
1 : 12.5
1 : 8
What is the correct calculation for the gross profit margin?
Gross Profit / Turnover * 100
Net Profit / Turnover * 100
Total Current Assets / Total Current Liabilities
(Current Assets - Inventory) / Current Liabilities
What is the correct calculation for the net profit margin?
Gross Profit / Turnover * 100
Net Profit / Turnover * 100
Total Current Assets / Total Current Liabilities
(Current Assets - Inventory) / Current Liabilities
A company has a high net profit ratio, what alterations can be made to improve the ratio?
Increase sales revenue
Increase expenses
Increase stock
Identify the three sections of a Balance Sheet
Revenue
Assets
Equity
Expenses
Liabilities
Three profitability ratios are:
Return on Assets (ROA)
Quick Ratio
Return on Equity (ROE)
Debt to Equity
Return on Capital Employed
Identify two liquidity ratios.
Current Ratio
Fixed Asset Turnover
Quick Ratio
Debt to Equity
The current ratio is also known as the:
Quick ratio
Working capital ratio
Cash flow ratio
Capital structure ratio
