Online Test — Accounting Ratios
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Liquidity ratios measure ability to meet ____ obligations.
Long-term
Short-term
Tax
No
Explanation: Liquidity ratios test short-term solvency.
Question 2 of 15
Current ratio =
CL ÷ CA
CA ÷ CL
Quick assets ÷ stock
Sales ÷ CA
Explanation: Current ratio = current assets ÷ current liabilities.
Question 3 of 15
The ideal current ratio is generally:
1 : 1
2 : 1
5 : 1
1 : 2
Explanation: Around 2:1 is considered satisfactory.
Question 4 of 15
Quick assets = current assets − inventory − :
Cash
Prepaid expenses
Debtors
Bills receivable
Explanation: Quick assets exclude inventory and prepaid expenses.
Question 5 of 15
The ideal quick ratio is about:
2 : 1
1 : 1
3 : 1
1 : 3
Explanation: Around 1:1 is considered satisfactory.
Question 6 of 15
Debt-equity ratio =
Equity ÷ debt
Debt ÷ equity
Debt ÷ assets
Equity ÷ assets
Explanation: Debt-equity = long-term debt ÷ shareholders' funds.
Question 7 of 15
Proprietary ratio =
Shareholders' funds ÷ total assets
Debt ÷ equity
Total assets ÷ debt
Sales ÷ assets
Explanation: Proprietary ratio = shareholders' funds ÷ total assets.
Question 8 of 15
Interest coverage ratio =
Interest ÷ PBIT
PBIT ÷ interest
Profit ÷ debt
Sales ÷ interest
Explanation: Interest coverage = PBIT ÷ interest.
Question 9 of 15
Inventory turnover ratio =
Average inventory ÷ COGS
Cost of revenue from operations ÷ average inventory
Sales ÷ profit
Revenue ÷ debtors
Explanation: Inventory turnover = COGS ÷ average inventory.
Question 10 of 15
Average inventory =
Opening − closing
(Opening + closing) ÷ 2
Closing only
Opening × closing
Explanation: Average = (opening + closing) ÷ 2.
Question 11 of 15
Gross profit ratio = (Gross profit ÷ ____) × 100.
Capital
Revenue from operations
Total assets
Debt
Explanation: Gross profit ratio uses revenue from operations as the base.
Question 12 of 15
Net profit Rs 60,000; revenue Rs 5,00,000. Net profit ratio =
12%
8%
20%
6%
Explanation: (60,000 / 5,00,000) × 100 = 12%.
Question 13 of 15
ROI =
(PBIT ÷ Capital Employed) × 100
(Net profit ÷ sales) × 100
Sales ÷ capital
Debt ÷ equity
Explanation: ROI = (PBIT ÷ Capital Employed) × 100.
Question 14 of 15
Capital employed =
Shareholders' funds + long-term debt
Current assets only
Sales
Cash
Explanation: Capital employed = SHF + long-term debt (or total assets − current liabilities).
Question 15 of 15
COGS 9,00,000; average inventory 1,50,000. Inventory turnover =
6 times
9 times
1.5 times
3 times
Explanation: 9,00,000 / 1,50,000 = 6 times.