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Financial Ratios

Total questions: 50

Worksheet time: 29mins

Name
Class
Date
1.
A comparison between two numbers showing how many times one number exceeds the other.
a)
return on investment
b)
profitability ratios
c)
ratio
d)
efficiency ratios
2.
Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.
a)
liquidity ratios
b)
efficiency ratios
c)
leverage ratios
d)
profitability ratios
3.
Financial ratios that indicate how effectively a company uses its resources to generate sales.
a)
liquidity ratios
b)
leverage ratios
c)
profitability ratios
d)
efficiency ratios
4.
Financial ratios that show how and to what degree a company has financed its assets.
a)
leverage ratios
b)
liquidity ratios
c)
efficiency ratios
d)
profitability ratios
5.
Financial ratios that tell how much of each dollar of sales, assets, and owner's investments resulted in net profit.
a)
liquidity ratios
b)
efficiency ratios
c)
profitability ratios
d)
leverage ratios
6.
The difference between current assets and current liabilities at a point in time. The amount of money that would be left over if all the current liabilities were paid off by current assets. 
a)
current ratio
b)
working capital
c)
acid test/ quick ratio
d)
asset turnover ratio
7.
The comparison of a firm's current assets to current liabilities. The ratio indicates the amount of current assets available to pay off $1 of current debt.
a)
acid test/ quick ratio
b)
asset turnover ratio
c)
current ratio
d)
inventory turnover
8.
Indicates a firm's ability to quickly liquidate assets to pay off current debts.
a)
asset turnover ratio
b)
inventory turnover
c)
debt-to-assets ratio
d)
acid test/ quick ratio
9.
Indicates the number of dollars in sales the firm generates from each dollar it has invested in assets. 
a)
asset turnover ratio
b)
acid test/ quick ratio
c)
debt-to-assets ratio
d)
debt-to-equity ratio
10.
The number of times during an operating period that the average inventory was sold.
a)
working capital
b)
return on investment
c)
inventory turnover
d)
debt-to-assets ratio
11.
Indicates how quickly a firm's credit accounts are being collected and is a good measure of how efficiently a firm is managing its accounts receivable.
a)
average collection period
b)
efficiency ratios
c)
working capital
d)
current ratio
12.
Measures to what degree the assets of the firm have been financed with borrowed funds.
a)
debt-to-equity-ratio
b)
liquidity ratio
c)
profitability ratio
d)
debt-to-assets ratio
13.
Compares the total debt of the firm with the owner's equity.
a)
debt-to-assets ratio
b)
debt-to-equity ratio
c)
asset turnover ratio
d)
efficiency ratio
14.
The amount of profit generated by the firm in relation to the amount invested by the owners.
a)
return on investment
b)
ratio
c)
working capital
d)
inventory turnover
15.
Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.
a)
liquidity ratios
b)
efficiency ratios
c)
leverage ratios
d)
profitability ratios
16.

Financial ratios that tell how much of each rand of sales, assets, and owner's equity resulted in net profit.

a)

liquidity ratios

b)

efficiency ratios

c)

profitability ratios

d)

leverage ratios

17.
The difference between current assets and current liabilities at a point in time. The amount of money that would be left over if all the current liabilities were paid off by current assets. 
a)
current ratio
b)
working capital
c)
acid test/ quick ratio
d)
asset turnover ratio
18.

The comparison of a firm's current assets to current liabilities. The ratio indicates the amount of current assets available to pay off R1 of current debt.

a)

acid test/ quick ratio

b)

asset turnover ratio

c)

current ratio

d)

inventory turnover

19.
Indicates a firm's ability to quickly liquidate assets to pay off current debts.
a)
asset turnover ratio
b)
inventory turnover
c)
debt-to-assets ratio
d)
acid test/ quick ratio
20.
The amount of profit generated by the firm in relation to the amount invested by the owners.
a)
return on investment
b)
ratio
c)
working capital
d)
inventory turnover
21.
The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the: 
a)
Balance Sheet
b)
Statement of Retained Earnings
c)
Statement of Cash Flows
d)
Income Statement
22.
If total expenses exceed total revenue, a net loss is reported
a)
True
b)
False
23.

Examples may include salaries, utilities, rent, insurance, and office supplies.

a)

Revenue

b)

Expenses

c)

Net Income

d)

Net Loss

24.
This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners o the company are entitled to.
a)
Income Statement
b)
Balance Sheet
25.
The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the: 
a)
Balance Sheet
b)
Statement of Retained Earnings
c)
Statement of Cash Flows
d)
Income Statement
26.
If total expenses exceed total revenue, a net loss is reported
a)
True
b)
False
27.
What does COGS stand for?
a)
cost of goals scored
b)
cost of goods stocked
c)
cost of goods sold
d)
cost of goods solvent
28.

How do you calculate Gross Profit?

a)

Sales - COGS

b)

Sales - NP

c)

COGS - Expenses

d)

COGS - NP

29.
The income statement can be expressed as an equation:
a)
Income =Income-Expenses
b)
Revenue-Expenses = Net Income (Loss)
c)
Revenue + Expenses = Income/Loss
d)
Expenses = Net Income + Revenue
30.
Examples may include salaries, utilities, rent, insurance, and office supplies.
a)
Revenue
b)
Expense
c)
Net Income
d)
Net Loss
31.
The sources of money generated by the sale of products or services.
a)
Revenue
b)
Expenses
c)
Net Income
d)
Net Loss
32.
This document communicates what the entity owns in terms of assets, what it owes in the terms of liabilities, and the difference between those two which represents what the owners o the company are entitled to.
a)
Income Statement
b)
Balance Sheet
33.
Assets = Liabilities + Equity
a)
Balance Sheet
b)
Income Statement
34.

What a company owes to creditors:

a)

Assets

b)

Liabilitites

c)

Equity

35.
You are presented a financial statement and from it you can tell what the business owed looking at a financial statement. By studying the information on the statement, you can tell what the business owns and what it owes as of a certain date. You are looking at:
a)
Income Statement
b)
Assets
c)
Revenues
d)
Balance Sheet
36.

The gross profit margin ratio is calculated by dividing:

a)

Profit by sales

b)

Profit by shareholders’ equity

c)

Gross profit by sales

d)

Sales by cost of sales

37.

The current ratio is also known as the:

a)

Quick ratio

b)

Working capital ratio

c)

Cash flow ratio

d)

Capital structure ratio

38.
What are assets?
a)
What a company owns; anything of value owned by a business.
b)
Costs of operating a business.
c)
Detailed plans for the financial needs of individuals, families, and businesses.
d)
Differences between actual and budgeted performance.  
39.
What are liabilities?
a)
The money paid to employees.
b)
Costs of operating a business.
c)
The act of buy items. 
d)
What a company owes.
40.
What is owner equity?
a)
The value of the business after liabilities are subtracted from assets; the value of the owner's investment in the business.
b)
What a company owes.
c)
Documents that are used to record and analyze the financial performance of a business.
d)
All income a company receives overtime.
41.
Financial ratios that tell how well a company can pay off its short-term debts and meet unexpected needs for cash.
a)
liquidity ratios
b)
efficiency ratios
c)
leverage ratios
d)
profitability ratios
42.
Financial ratios that tell how much of each dollar of sales, assets, and owner's investments resulted in net profit.
a)
liquidity ratios
b)
efficiency ratios
c)
profitability ratios
d)
leverage ratios
43.
The difference between current assets and current liabilities at a point in time. The amount of money that would be left over if all the current liabilities were paid off by current assets. 
a)
current ratio
b)
working capital
c)
acid test/ quick ratio
d)
asset turnover ratio
44.
The difference between current assets and current liabilities at a point in time. The amount of money that would be left over if all the current liabilities were paid off by current assets. 
a)
current ratio
b)
working capital
c)
acid test/ quick ratio
d)
asset turnover ratio
45.

What is the formula for Gross Profit Margin

a)

Profit / Net sales revenue X 100

b)

Gross profit / Net sales revenue X 100

c)

Gross profit / Sales revenue X 100

d)

Profit / Cost of sales X 100

46.

From 2015 to 2016, the Current Ratio went from 1.32:1 to 1.19:1; and the Acid Test Ratio went from 0.9:1 to 0.86:1.

With this in mind, has the liquidity position of D&C plc improved over the past two years?

a)

Both current ratio and acid test ratio have improved

b)

Both the current ratio and acid test ratio have worsened

c)

Current ratio has improved but acid test ratio has worsened

d)

Current ratio has worsened but acid test ratio has improved

47.

From 2015 to 2016, the Gross Profit Margin went from 32.86% to 50.19%; ROCE from 31.8% to 53.0%; and Net Profit Margin from 14.71% to 27.14%.

Using these ratios, we see that the profitability of D&C plc over the past two years ...

a)

Has steadily worsened

b)

Has stayed the same

c)

Has seen a strong increase

d)

I have no idea what these figures mean...

48.

From 2015 to 2016, the Inventory Turnover went from 7.58 time to 6.97 times; Payable Days from 102 to 100; and Receivables Days from 59 to 56.

Using these ratios to evaluate the financial efficiency of D&C plc over the past two years, we see that ...

a)

... all ratios getting stronger

b)

.. inventory turnover and receivables strengthening, but payables days worsening

c)

... inventory turnover and receivables worsening, but payables days strengthening

d)

... all ratios getting weaker

49.

A firm has capital employed of £45m; current assets of £17m; current liabilities of £2.9m and non-current liabilities of £10.9m.

What is its current ratio value?

a)

14.1 million

b)

5.86:1

c)

37.78%

d)

1.23:1

50.

Which financial ratio considers the long-term liabilities of a firm?

a)

Gearing

b)

Return on Capital Employed

c)

Net Profit Margin

d)

Receivables days

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