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Vidaara.orgClass 12 · Mathematics
CodeVID-M12-WS
Accounting Ratios — Practice Worksheet
Chapter: Accounting Ratios
Topic: Accounting Ratios
Maximum Marks: 35
Time: 30 minutes
Name: ____________________ Roll No.: __________ Date: ____________

General Instructions

  • All questions are compulsory.
  • Choose the correct option (A, B, C or D) for each question.
  • The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each) 15 × 1 = 15 marks
1.
Liquidity ratios measure ability to meet ____ obligations.
  • A.Long-term
  • B.Short-term
  • C.Tax
  • D.No
2.
Current ratio =
  • A.CL ÷ CA
  • B.CA ÷ CL
  • C.Quick assets ÷ stock
  • D.Sales ÷ CA
3.
The ideal current ratio is generally:
  • A.1 : 1
  • B.2 : 1
  • C.5 : 1
  • D.1 : 2
4.
Quick assets = current assets − inventory − :
  • A.Cash
  • B.Prepaid expenses
  • C.Debtors
  • D.Bills receivable
5.
The ideal quick ratio is about:
  • A.2 : 1
  • B.1 : 1
  • C.3 : 1
  • D.1 : 3
6.
Debt-equity ratio =
  • A.Equity ÷ debt
  • B.Debt ÷ equity
  • C.Debt ÷ assets
  • D.Equity ÷ assets
7.
Proprietary ratio =
  • A.Shareholders' funds ÷ total assets
  • B.Debt ÷ equity
  • C.Total assets ÷ debt
  • D.Sales ÷ assets
8.
Interest coverage ratio =
  • A.Interest ÷ PBIT
  • B.PBIT ÷ interest
  • C.Profit ÷ debt
  • D.Sales ÷ interest
9.
Inventory turnover ratio =
  • A.Average inventory ÷ COGS
  • B.Cost of revenue from operations ÷ average inventory
  • C.Sales ÷ profit
  • D.Revenue ÷ debtors
10.
Average inventory =
  • A.Opening − closing
  • B.(Opening + closing) ÷ 2
  • C.Closing only
  • D.Opening × closing
11.
Gross profit ratio = (Gross profit ÷ ____) × 100.
  • A.Capital
  • B.Revenue from operations
  • C.Total assets
  • D.Debt
12.
Net profit Rs 60,000; revenue Rs 5,00,000. Net profit ratio =
  • A.12%
  • B.8%
  • C.20%
  • D.6%
13.
ROI =
  • A.(PBIT ÷ Capital Employed) × 100
  • B.(Net profit ÷ sales) × 100
  • C.Sales ÷ capital
  • D.Debt ÷ equity
14.
Capital employed =
  • A.Shareholders' funds + long-term debt
  • B.Current assets only
  • C.Sales
  • D.Cash
15.
COGS 9,00,000; average inventory 1,50,000. Inventory turnover =
  • A.6 times
  • B.9 times
  • C.1.5 times
  • D.3 times
Section B — Challenge / Olympiad (2 marks each) 10 × 2 = 20 marks
16.
Current assets Rs 5,00,000 (inventory Rs 1,50,000, prepaid Rs 50,000); current liabilities Rs 2,50,000. The quick ratio is:
  • A.1.2 : 1
  • B.2 : 1
  • C.1 : 1
  • D.1.4 : 1
17.
A current ratio of 5:1 would usually be judged:
  • A.Possibly too high — funds may be idle in stock/debtors
  • B.Ideal
  • C.Dangerously low
  • D.Impossible
18.
Shareholders' funds Rs 8,00,000, long-term debt Rs 12,00,000, total assets Rs 22,00,000. Debt-equity and proprietary ratios are:
  • A.1.5 : 1 and 0.36
  • B.0.67 : 1 and 0.36
  • C.1.5 : 1 and 0.55
  • D.1 : 1 and 0.5
19.
Why is the quick ratio a stricter test of liquidity than the current ratio?
  • A.It excludes the least-liquid current assets (inventory and prepaid expenses)
  • B.It includes more assets
  • C.It ignores liabilities
  • D.It uses sales
20.
Revenue Rs 24,00,000; average trade receivables Rs 4,00,000 (all credit sales). The trade receivables turnover and collection period are:
  • A.6 times; about 2 months
  • B.4 times; 3 months
  • C.6 times; 1 month
  • D.3 times; 4 months
21.
Operating ratio is 78%. The operating profit ratio is:
  • A.22%
  • B.78%
  • C.122%
  • D.Cannot tell
22.
PBIT Rs 3,00,000; interest on long-term debt Rs 60,000. The interest coverage ratio is:
  • A.5 times
  • B.0.2 times
  • C.6 times
  • D.3 times
23.
Which change would IMPROVE the current ratio of a firm with a ratio above 1?
  • A.Collecting cash from a debtor (one current asset replaces another)
  • B.Paying a creditor with cash
  • C.Buying stock on credit
  • D.Taking a short-term loan
24.
Net profit ratio is rising but ROI is falling. A plausible reason is that:
  • A.Capital employed grew faster than profit (assets used less efficiently)
  • B.Sales fell
  • C.Interest disappeared
  • D.It is impossible
25.
A high inventory turnover ratio generally indicates:
  • A.Stock is sold and replaced quickly (efficient)
  • B.Stock is piling up
  • C.Low sales
  • D.High debt

Answer Key

Section A — Multiple Choice (1 mark each)
  1. (B) Short-term
  2. (B) CA ÷ CL
  3. (B) 2 : 1
  4. (B) Prepaid expenses
  5. (B) 1 : 1
  6. (B) Debt ÷ equity
  7. (A) Shareholders' funds ÷ total assets
  8. (B) PBIT ÷ interest
  9. (B) Cost of revenue from operations ÷ average inventory
  10. (B) (Opening + closing) ÷ 2
  11. (B) Revenue from operations
  12. (A) 12%
  13. (A) (PBIT ÷ Capital Employed) × 100
  14. (A) Shareholders' funds + long-term debt
  15. (A) 6 times
Section B — Challenge / Olympiad (2 marks each)
  1. (A) 1.2 : 1
  2. (A) Possibly too high — funds may be idle in stock/debtors
  3. (A) 1.5 : 1 and 0.36
  4. (A) It excludes the least-liquid current assets (inventory and prepaid expenses)
  5. (A) 6 times; about 2 months
  6. (A) 22%
  7. (A) 5 times
  8. (B) Paying a creditor with cash
  9. (A) Capital employed grew faster than profit (assets used less efficiently)
  10. (A) Stock is sold and replaced quickly (efficient)
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