WorksheetsRatioAnalysis-Quiz1
Total questions: 30
Worksheet time: 30mins
Quick Assets= ?
CA- Prepaid expenses
CA- Inventory- Prepaid expenses
CA + Inventory- Prepaid expenses
CA- Inventory + Prepaid expenses
Which of the following transaction will result in an increase in current ratio:
Goods costing $1000 sold on credit for $900
Goods costing $1000 sold on cash for $900
Goods costing $1000 sold in cash for $1100
None of these
Efficiency ratios highlights:
How well assets and liabilities are managed
Measures how quickly assets can be converted to cash
Share of ownership in a company
A comparison of two amounts
RECEIVABLE TURNOVER
Average ReceivablesNet Credit Sales
Average Daily Credit SalesAverage Receivables
Receivables Turnover365 days
ReceivablesCash Sales
If current liabilities are P100,000 and current assets are P200,000, what is the current ratio?
0.50
1.20
1.50
2.00
NOT IN THE CHOICES
A financial institution contemplating giving a loan to an entity would be most interested in
the entity’s ability to generate cash flows.
an entity’s ability to generate profits.
an entity’s ability to pay its employees.
an entity’s ability to pay its suppliers.
The transaction involving a decrease in debt equity ratio and increase in current ratio is
Issue of debentures against the purchase of fixed assets
Issue of debenture for cash
Redemption of preference share for cash
Issue of equity shares for cash
Current ratio is 2:1. On the sale of fixed asset (book value Rs. 20,000) for Rs. 18,000 state whether the current ratio will
Improve
Decline
Not change
Can't say
if opening inventory is Rs. 1,20,000 cost of revenue from operation is Rs. 10,00,000 and inventory turnover is 5 times then closing inventory will be
Rs. 3,20,000
Rs. 2,80,000
Rs. 1,60,000
Rs. 4,00,000
A transaction involving the decrease in both current ratio and quick ratio is
Sale of non current asset for cash
Sale of stock in trade at loss
Cash payment of a current liability
Purchase of stock in trade on credit
If current ratio form is 2.5:1 and its current liabilities are Rs. 2,00,000. Its working capital will be
Rs. 3,00,000
Rs. 3,75,000
Rs. 4,00,000
Rs. 7,00,000
Non current assets of a firm are Rs. 26,00,000, current assets are Rs. 9,00,000 and shareholders' fund are Rs. 21,50,000. Total debts of the firm will be
Rs. 43,50,000
Rs. 13,50,000
Rs. 21,50,000
Rs. 38,50,000
How do you calculate Gross Profit?
Sales - COGS
Sales - NP
COGS - Expenses
COGS - NP
Which of the following is not a current asset account?
Inventory
Prepaid Insurance
Fixtures
Bank
For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the beginning of the year, its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year, its Accounts Receivable were $86,000 and its Inventory was $110,000.
On average how many days of sales were in Accounts Receivable during the year?
35
36
37
38
What does the debt-to-equity ratio indicate?
It indicates the cash flow of a business.
It measures a company's profitability.
It shows the total assets of a company.
It indicates the financial leverage and risk of a company.
What does a high current ratio signify?
It signifies strong liquidity and financial health.
It indicates a high level of debt.
It shows poor cash flow management.
It reflects a decrease in asset value.
How do you interpret a low debt-to-equity ratio?
It means the company is heavily reliant on debt financing.
A low ratio suggests aggressive investment strategies.
A low debt-to-equity ratio suggests lower financial risk and a conservative financing approach.
A low debt-to-equity ratio indicates high financial leverage.
Why is ratio analysis important for stakeholders like investors and creditors?
It helps them understand market trends.
It allows them to evaluate a company's financial condition.
It provides insights into employee performance.
It predicts future stock prices.
Which of the following statements about ratio analysis is accurate?
Ratio analysis is only useful for internal management.
Ratio analysis only focuses on long-term financial performance.
Ratio analysis can provide insights into a company's profitability, liquidity, efficiency, and solvency.
Ratio analysis is not relevant for investors or creditors.
What do liquidity ratios assess in a company?
The profitability of the company's investments.
The long-term financial stability of the firm.
The ability to meet short-term obligations.
The efficiency of inventory management.
The Inventory Turnover Ratio is calculated as
Cost of Goods Sold ÷ Average Inventory
Sales ÷ Current Assets
Sales ÷ Fixed Assets
Operating Profit ÷ Average Inventory
If the Current Ratio is 2:1, which of the following can be a possible set of values?
Current Assets ₹1,00,000; Current Liabilities ₹50,000
Current Assets ₹80,000; Current Liabilities ₹1,00,000
Current Assets ₹1,00,000; Current Liabilities ₹1,00,000
Current Assets ₹50,000; Current Liabilities ₹1,00,000
The Debtors Turnover Ratio is used to measure:
Liquidity of inventory
Efficiency of credit collection
Profitability
Solvency
If Current Assets = ₹1,50,000 and Working Capital = ₹60,000, find Current Liabilities.
60000
90000
120000
210000
Average Inventory = ₹50,000 and Cost of Goods Sold = ₹2,50,000. What is the Inventory Turnover Ratio?
4 times
5 times
6 times
7 times
Total Debt = ₹3,00,000 and Shareholders’ Equity = ₹2,00,000. What is the Debt-to-Equity Ratio?
1:1
1.2:1
1.5:1
2:1
If COGS is $4,50,000
G.P. is 25% on sales
What will be the sales?
$5,00,000
$8,00,000
$3,00,000
$6,00,000
If current ratio is 3:1, liquid ratio is 2:1 stock is $50,000 . What will be the value of current assets ?
$200,000
Incomplete information
$50,000
$150,000
Proprietary Ratio= ?
Equity Share capital / Total assets
Equity Share capital + preference share Capital / Total assets
Share holder fund/ Total Assets
Equity Share capital / Total assets- fictitious assets
