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Home › Accountancy & Business Studies › Accountancy & Business Studies - Ratio Analysis

Accountancy & Business Studies - Ratio Analysis — Accountancy & Business Studies Questions & Practice

Practise 47 Accountancy & Business Studies - Ratio Analysis questions from Accountancy & Business Studies for competitive exams such as UPSC, Banking, SSC and Railway. Read the worked questions below, check every answer with an explanation, and track what you get wrong.

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Practice questions on Accountancy & Business Studies - Ratio Analysis — with answers

Try each question first, then open the answer. Explanations are included.

1. Which of the following describes the Current Ratio?

  1. AA ratio measuring the efficiency of debt collection, calculated as Net Credit Sales divided by Average Debtors
  2. BA solvency ratio calculated as Total Assets divided by Total Long-term Debt
  3. CA liquidity ratio calculated as Quick Assets (Current Assets minus Inventory) divided by Current Liabilities
  4. DA liquidity ratio calculated as Current Assets divided by Current Liabilities
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Answer: D

'Current Ratio' relates to: A liquidity ratio calculated as Current Assets divided by Current Liabilities

2. The Current Ratio is calculated as / refers to:

  1. AA profitability measure calculated as Net Profit available to equity shareholders divided by the number of equity shares
  2. BA profitability ratio calculated as Gross Profit divided by Net Sales, expressed as a percentage
  3. CA liquidity ratio calculated as Current Assets divided by Current Liabilities
  4. DThe difference between a company's current assets and current liabilities, indicating short-term financial health
Show answer

Answer: C

'Current Ratio' relates to: A liquidity ratio calculated as Current Assets divided by Current Liabilities

3. Which ratio/concept is described as: 'A liquidity ratio calculated as Current Assets divided by Current Liabilities'?

  1. ADebt-Equity Ratio
  2. BCurrent Ratio
  3. CFixed Assets Turnover Ratio
  4. DGross Profit Ratio
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Answer: B

This corresponds to 'Current Ratio'.

4. Identify the ratio: 'A liquidity ratio calculated as Current Assets divided by Current Liabilities'.

  1. AQuick Ratio (Acid Test Ratio)
  2. BCurrent Ratio
  3. CReturn on Investment (ROI)
  4. DInterest Coverage Ratio
Show answer

Answer: B

This corresponds to 'Current Ratio'.

5. Which of the following describes the Quick Ratio (Acid Test Ratio)?

  1. AThe difference between a company's current assets and current liabilities, indicating short-term financial health
  2. BA solvency ratio calculated as Total Assets divided by Total Long-term Debt
  3. CA liquidity ratio calculated as Quick Assets (Current Assets minus Inventory) divided by Current Liabilities
  4. DA profitability ratio measuring the return generated relative to the investment made
Show answer

Answer: C

'Quick Ratio (Acid Test Ratio)' relates to: A liquidity ratio calculated as Quick Assets (Current Assets minus Inventory) divided by Current Liabilities

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