Ratio Analysis Set 1

Bachelor of Business Administration (BBA)

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This set of Analysis of Financial Statements Multiple Choice Questions & Answers (MCQs) focuses on Ratio Analysis Set 1

Q1 | Profit for the objective of calculating a ratio may be taken as
  • profit before tax but after interest
  • profit before interest &tax
  • profit after interest & tax
  • all the above
Answer: all the above
Q2 | If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is
  • 24%
  • 41%
  • 60%
  • none of the above
Answer: 24%
Q3 | General profitability ratios are based on
  • investment
  • sales
  • a & b
  • none of the above
Answer: sales
Q4 | Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs3,20,000 & Gross profit ratio is 25% on sales.
  • 31 times
  • 11 times
  • 8 times
  • 32 times
Answer: 8 times
Q5 | The ratios which reveal the final result of the managerial policies and performance is .
  • turnover ratios.
  • profitability ratios.
  • short term solvency ratio.
  • long term solvency ratio.
Answer: profitability ratios.
Q6 | Return on investment is a
  • turnover ratios.
  • short term solvency ratio.
  • profitability ratios.
  • long term solvency ratio.
Answer: profitability ratios.
Q7 | Net profit ratio is a .
  • turnover ratio.
  • long term solvency ratio.
  • short term solvency ratio
  • profitability ratio.
Answer: profitability ratio.
Q8 | Stock turnover ratio is a .
  • turnover ratio.
  • profitability ratio.
  • short term solvency ratio.
  • long term solvency ratio.
Answer: turnover ratio.
Q9 | Current ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: short-term solvency ratio.
Q10 | Proprietary ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: long-term solvency ratio.
Q11 | Fixed assets ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: long-term solvency ratio.
Q12 | Fixed assets turnover ratio is a
  • short-term solvency ratio.
  • long-term solvency ratio.
  • profitability ratio.
  • turnover ratio.
Answer: turnover ratio.
Q13 | The ratio which measures the profit in relation to capital employed is known as
  • return on investment.
  • gross profit ratio.
  • operating ratio.
  • operating profit ratio.
Answer: return on investment.
Q14 | Return on equity is also called
  • return on investment.
  • gross profit ratio.
  • return on shareholders’ funds.
  • return on net worth.
Answer: return on net worth.
Q15 | Preliminary expenses is an example of .
  • fixed assets.
  • current assets.
  • fictitious assets.
  • current liabilities.
Answer: fictitious assets.
Q16 | Prepaid expenses is an example of .
  • fixed assets.
  • current assets.
  • fictitious assets.
  • current liabilities.
Answer: current assets.
Q17 | The ratio which is calculated to measure the productivity of total assets is
  • return on equity.
  • return on shareholders’ funds.
  • return on total assets.
  • return on equity share holders’ funds.
Answer: return on total assets.
Q18 | The ratio which shows the proportion of profits retained in the business out of the current year’s profitsis
  • retained earnings ratio.
  • payout ratio
  • earnings per share.
  • price earnings ratio
Answer: retained earnings ratio.
Q19 | The ratio establishes the relationship between profit before interest and tax and fixed interest charges is
  • interest cover ratio.
  • fixed dividend cover ratio.
  • debt service coverage ratio.
  • dividend yield ratio.
Answer: interest cover ratio.
Q20 | The ratio shows the preference dividend as a proportion of profit available for shareholders is
  • interest cover ratio.
  • fixed dividend cover ratio.
  • debt service coverage ratio.
  • dividend yield ratio.
Answer: fixed dividend cover ratio.
Q21 | The dividend is related to the market value of shares in .
  • interest cover ratio.
  • fixed dividend cover ratio.
  • debt service coverage ratio.
  • dividend yield ratio.
Answer: dividend yield ratio.
Q22 | Turnover ratio is also known as .
  • activity ratios.
  • solvency ratios.
  • liquidity ratios.
  • profitability ratios.
Answer: activity ratios.
Q23 | Inventory or stock turnover ratio is also called .
  • stock velocity ratio.
  • debtors velocity ratio.
  • creditors velocity ratio.
  • working capital turnover ratio.
Answer: stock velocity ratio.
Q24 | The ratio which measures the relationship between the cost of goods sold and the amount of averageinventory is
  • stock turnover ratio.
  • debtors velocity ratio.
  • creditors velocity ratio.
  • working capital turnover ratio.
Answer: stock turnover ratio.
Q25 | Sales – Gross Profit = .
  • net profit.
  • administrative expenses.
  • cost of production.
  • cost of goods sold.
Answer: cost of goods sold.
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