Deck 4: Financial Statement Analysis and Ratios: Part B

Question 1

Profit for the objective of calculating a ratio may be taken as

A)profit before tax but after interest
B)profit before interest &tax
C)profit after interest & tax
D)all of the above

Answer 1

all of the above

Question 2

If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is

A)24%
B)41%
C)60%
D)none of the above

Answer 2

24%

Question 3

General profitability ratios are based on

A)investment
B)sales
C)both a & b
D)none of the above

Answer 3

sales

Question 4

Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs 3,20,000 & Gross profit ratio is 25% on sales.

A)31 times
B)11 times
C)8 times
D)32 times

Question 5

The ratios which reveal the final result of the managerial policies and performance is .

A)turnover ratios.
B)profitability ratios.
C)short term solvency ratio.
D)long term solvency ratio.

Question 6

Return on investment is a

A)turnover ratios.
B)short term solvency ratio.
C)profitability ratios.
D)long term solvency ratio.

Question 7

Net profit ratio is a .

A)turnover ratio.
B)long term solvency ratio.
C)short term solvency ratio
D)profitability ratio.

Question 8

Stock turnover ratio is a .

A)turnover ratio.
B)profitability ratio.
C)short term solvency ratio.
D)long term solvency ratio.

Question 9

Current ratio is a

A)short-term solvency ratio.
B)long-term solvency ratio.
C)profitability ratio.
D)turnover ratio.

Question 10

Proprietary ratio is a

A)short-term solvency ratio.
B)long-term solvency ratio.
C)profitability ratio.
D)turnover ratio.

Question 11

Fixed assets ratio is a

A)short-term solvency ratio.
B)long-term solvency ratio.
C)profitability ratio.
D)turnover ratio.

Question 12

Fixed assets turnover ratio is a

A)short-term solvency ratio.
B)long-term solvency ratio.
C)profitability ratio.
D)turnover ratio.

Question 13

The ratio which measures the profit in relation to capital employed is known as

A)return on investment.
B)gross profit ratio.
C)operating ratio.
D)operating profit ratio.

Question 14

Return on equity is also called

A)return on investment.
B)gross profit ratio.
C)return on shareholders' funds.
D)return on net worth.

Question 15

Preliminary expenses is an example of .

A)fixed assets.
B)current assets.
C)fictitious assets.
D)current liabilities.

Question 16

Prepaid expenses is an example of .

A)fixed assets.
B)current assets.
C)fictitious assets.
D)current liabilities.

Question 17

The ratio which is calculated to measure the productivity of total assets is

A)return on equity.
B)return on shareholders' funds.
C)return on total assets.
D)return on equity share holders' funds.

Question 18

The ratio which shows the proportion of profits retained in the business out of the current year's profits is

A)retained earnings ratio.
B)payout ratio
C)earnings per share.
D)price earnings ratio

Question 19

The ratio establishes the relationship between profit before interest and tax and fixed interest charges is

A)interest cover ratio.
B)fixed dividend cover ratio.
C)debt service coverage ratio.
D)dividend yield ratio.

Question 20

The ratio shows the preference dividend as a proportion of profit available for shareholders is

A)interest cover ratio.
B)fixed dividend cover ratio.
C)debt service coverage ratio.
D)dividend yield ratio.

Question 21

The dividend is related to the market value of shares in .

A)interest cover ratio.
B)fixed dividend cover ratio.
C)debt service coverage ratio.
D)dividend yield ratio.

Question 22

Turnover ratio is also known as .

A)activity ratios.
B)solvency ratios.
C)liquidity ratios.
D)profitability ratios.

Question 23

Inventory or stock turnover ratio is also called .

A)stock velocity ratio.
B)debtors velocity ratio.
C)creditors velocity ratio.
D)working capital turnover ratio.

Question 24

The ratio which measures the relationship between the cost of goods sold and the amount of average inventory is

A)stock turnover ratio.
B)debtors velocity ratio.
C)creditors velocity ratio.
D)working capital turnover ratio.

Question 25

Sales - Gross Profit = .

A)net profit.
B)administrative expenses.
C)cost of production.
D)cost of goods sold.