Question types

Ratio Analysis question types

54 questions across 5 question groups — pick any mix to generate a Accountancy paper with step-by-step answer keys.

54
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5
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5
Question types
Sample Questions

Ratio Analysis questions

One sample from each question group in this chapter. Select any group above to see the full set with answer keys.

Which one of the following is not correctly matched?
  • A
    Liquid ratio – Proportion
  • B
    Gross profit ratio – Percentage
  • C
    Fixed assets turnover ratio – Percentage
  • D
    Debt-equity ratio – Proportion
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To test the liquidity of a concern, which of the following ratios are useful?

  1. Quick ratio
  2. Net profit ratio
  3. Debt-equity ratio
  4. Current ratio

Select the correct answer using the codes given below:

  • A
    (i) and (ii)
  • B
    (i) and (iv)
  • C
    (ii) and (iii)
  • D
    (ii) and (iv)
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Match List I with List II and select the correct answer using the codes given below:
List IList II
(i) Current ratio1. Liquidity
(ii) Net profit ratio2. Efficiency
(iii) Debt-equity ratio3. Long term solvency
(iv) Inventory turnover ratio4. Profitability
  • A
    (i) – 1,(ii) – 4,(iii) – 3,(iv) – 2
  • B
    (i) – 3,(ii) – 2,(iii) – 4,(iv) – 1
  • C
    (i) – 4,(ii) – 3,(iii) – 2,(iv) – 1
  • D
    (i) – 1,(ii) – 2,(iii) – 3,(iv) – 4
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From the given balance sheet of Mr. A, calculate the activity (turnover) ratios.
The balance sheet as on 31.12.2004
LiabilitiesAsset
Share capital2,00,000Land50,000
Profit and loss A/c1,00,000Building1,00,000
Reserve and surplus1,00,000Equipments75,000
Creditors1,25,000Furniture75,000
Bills payable25,000Stock2,00,000
6% Debentures50,000Debtors60,000
Bills receivable30,000
Cash10,000
6,00,000 6,00,000
Additional Information: Credit purchase ₹ 5,00,000; credit sales ₹ 9,00,000
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Calculate current ratio of a company from the following information
Inventory turnover ratio = 4 times
Inventory in the end was ₹ 20,000 more than inventory in the beginning. Revenue from operations ₹ 3,00,000 Gross profit ratio = 25%
Current liabilities ₹ 40,000; Quick ratio 0.75:1
Cost of revenue from operations
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Current ratio = 2:1. State and give a reason which of the following would improve, reduce or does not change the ratio
(a) Repayment of current liabilities
(b) Purchasing goods on credit
(c) Sale of office types of equipment for ₹ 4000 (book value ₹ 5000)
(d) Sale of goods ₹ 11,000 (cost ₹ 10,000)
(e) Payment of dividend
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From the following trading activities of Rovina Ltd. calculate
  1. Gross profit ratio
  2. Net profit ratio
  3. Operating cost ratio
  4. Operating profit ratio
Statement of Profit and Loss
Particulars Rs.
$I$ Revenue from operations $4,00,000$
$II.$ Other income:  
Income from investment $4,000$
$III.$ Total revenues $(I+II)$ $4,04,000$
$IV.$ Expenses:  
Purchases of stock$-$in$-$trade $2,10,000$
Changes in inventories $30,000$
Employee benefits expense $24,000$
Other expenses $($Administration and selling$)$ $60,000$
Total expenses $3,24,000$
$V.$ Profit for year $80,000$
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Calculate
  1. Inventory turnover ratio
  2. Trade receivables turnover ratio
  3. Trade payables turnover ratio and
  4. Fixed assets turnover ratio from the following information obtained from Aruna Ltd.
Particulars As of $31^{st}$ March $2018\ (₹)$ As of $31^{st}$ March $2019\  (₹)$
Inventory $3,60,000$ $4,40,000$
Trade receivables $7,40,000$ $6,60,000$
Trade Payable $1,90,000$ $ 2,30,000$
Fixed assets $6,00,000$ $8,00,000$
Additional information:
  • Revenue from operations for the year $₹\ 35,00,000$
  • Purchases for the year $₹\ 21,00,000$
  • Cost of revenue from operation $₹\ 16,00,000$
    Assume that sales and purchases are for credit.
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