[250] MCQs of Accounting Ratios (Accountancy class 12)
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We have compiled very important MCQs of the practical portion of the Accounting Ratios chapter of class 12
Multiple Choice Questions of Accounting Ratios with answers of Accountancy class 12
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The current Ratio establishes a relation between
a) (Current Assets – Inventory) and Current Liabilities
b) Quick Assets and Current Liabilities
c) Current Assets and Current Liabilities
d) None of the above
Ans – c)
Ratios calculated to measure the firm’s ability to meet its short-term obligations are
(a) Profitability Ratios
(b) Activity Ratios
(c) Liquidity Ratios
(d) Solvency Ratios
Ans – (c)
Current Ratio and Quick Ratio of a company are 2 : 1.
From the following transaction, select the transaction which will not change the current Ratios as well as Quick Ratio:
(a) Purchase of stock-in-trade for cash
(b) sale of an office furniture (Book value ₹ 25,000) for ₹ 20,000
(c) Cash collected from trade receivables ₹ 20,000
(d) Payment of dividend
Ans – (c)
Assuming that the current ratio is 2 : 1, purchase of goods on credit would:
(a) Increase Current Ratio
(b) Decrease Current Ratio
(c) Have no effect on Current Ratio
(d) Decrease gross profit ratio
Ans – (b)
Particulars | ₹ |
Cash at Bank | 35,000 |
10% Investments (interest is accrued for 3 months) | 40,000 |
Trade Receivables 1,00,000 Less: Provision for Doubtful Debts 4,000 | 96,000 |
Advance Tax | 8,000 |
Computers | 20,000 |
Inventory | 80,000 |
Current Liabilities | 1,00,000 |
Current Ratio will be:
(a) 2.6 : 1
(b) 2.24 : 1
(c) 2.2 : 1
(d) 2.4 : 1
Ans – (c)
Current Ratio of a Company is 2.4 : 1 and its Current Liabilities are ₹ 2,00,000. Subsequently, it sold goods costing ₹ 1,00,000 at a profit of 40%, half of which was on Credit. Current Ratio will be:
(a) 3.1 : 1
(b) 2.4 : 1
(c) 2.6 : 1
(d) 2.5 : 1
Ans – (c)
Assuming that the current ratio is 2 : 1, Cash paid against Bills Payable would:
(a) Increase current ratio
(b) Decrease Current Ratio
(c) Have no effect on Current Ratio
(d) Decrease gross profit ratio
Ans – (a)
Quick ratio of Megamart Ltd. is 1.5 : 1. Which of the following transactions will result in decrease in this ratio?
(a) Sale of goods costing ₹ 10,000 for ₹ 12,000
(b) Cash collected from trade receivables ₹ 41,000
(c) Purchase of goods for cash ₹ 38,000
(d) Creditors were paid ₹ 11,000
Ans – (c)
Liquid Assets:
(a) Current Assets – Prepaid Exp.
(b) Current Assets – Inventory + Prepaid Exp.
(c) Current Assets – Inventory – Prepaid Exp.
(d) Current Assets + Inventory – Prepaid Exp.
Ans – (c)
₹ | |
Current Assets (including prepaid expenses ₹ 20,000) | 10,20,000 |
Trade Payables | 3,00,000 |
Short-term Borrowings | 1,40,000 |
8% Debentures | 1,00,000 |
Provision for Tax | 50,000 |
Calls in Advance | 10,000 |
Current Ratio will be:
(a) 2.04 : 1
(b) 2 : 1
(c) 1.7 : 1
(d) 1.67 : 1
Ans – (a)
Following particulars are related to X Ltd.
Particulars | ₹ |
Inventory | 1,20,000 |
Trade Receivables | 70,000 |
Goodwill | 1,10,000 |
Cash and Cash Equivalents | 30,000 |
Current Liabilities (including Outstanding Expenses ₹ 10,000) | 1,10,000 |
Current Ratio will be:
(a) 2.2 : 1
(b) 3 : 1
(c) 2 : 1
(d) 3.3 : 1
Ans – (c)
Current Ratio is:
(a) Solvency Ratio
(b) Liquidity Ratio
(c) Activity Ratio
(d) Profitability Ratio
Ans – (b)
Inventory ₹ 3,00,000 (excluding loose tools ₹ 90,000); Trade Receivables ₹ 1,10,000; Trade Payables ₹ 1,80,000; Prepaid Expenses ₹ 40,000 and Goodwill is ₹ 45,000. Current Ratio will be:
(a) 2.75 : 1
(b) 2.5 : 1
(c) 3 : 1
(d) 3.25 : 1
Ans – (b)
Which of the following is/are objectives of ratio analysis?
a) To know the areas of the business which need more attention.
b) To provide a deeper analysis of the profitability, liquidity, solvency
and efficiency levels in the business.
c) To provide information by making cross-sectional analysis by comparing the performance with the best industry standards
d) All of the above
Ans – d)
A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are ₹ 2,00,000 and Inventory is ₹ 1,80,000. Current Ratio will be:
(a) 0.9 : 1
(b) 1.9 : 1
(c) 1.4 : 1
(d) 2.4 : 1
Ans – (d)
Particulars | ₹ |
Long-term Borrowings | 18,00,000 |
Bank Overdraft | 6,00,000 |
Shareholders’ Funds | 12,00,000 |
General Reserve | 3,00,000 |
Securities Premium Reserve | 5,00,000 |
Debit-Equity Ratio will be
(a) 2 : 1
(b) 1.2 : 1
(c) 0.9 : 1
(d) 1.5 : 1
Ans – (d)
Particulars | ₹ |
Current Liabilities (including Bank Overdraft ₹ 1,00,000) | 5,00,000 |
Trade Receivables | 4,80,000 |
Patents | 40,000 |
Cash at Bank | 80,000 |
Inventory (including loose tools ₹ 60,000) | 7,00,000 |
Current Ratio will be:
(a) 3 : 1
(b) 2.48 : 1
(c) 2.52 : 1
(d) 2.4 : 1
Ans – (d)
A transaction involving decrease in Debt-Equity Ratio and increase in Current Ratio is
(a) Issue of Debentures against the purchase of Fixed Assets
(b) Redemption of Preference Shares for Cash
(c) Issue of Equity Shares for Cash
(d) Issue of Debentures for Cash
Ans – (c)
A Company’s Quick Ratio is 1.8 : 1; Liquid Assets are ₹ 5,40,000 and Inventory is ₹ 1,50,000. Its Current Ratio will be:
(a) 2 : 1
(b) 2.3 : 1
(c) 1.8 : 1
(d) 1.3 : 1
Ans – (b)
Current Assets ₹ 1,92,500; Inventory ₹ 55,000; Prepaid Expenses ₹ 6,250 and Current Ratio is 2.2 : 1; then Liquid Ratio will be
(a) 3 : 1
(b) 1.5 : 1
(c) 1 : 1
(d) None of these
Ans – (b)
Liquid Assets of a Company are ₹ 15,00,000 and Current Liabilities are ₹ 20,00,000. Which of the following will increase the Liquid Ratio:
(a) Purchase of goods o credit for 2 months
(b) Sale of goods costing ₹ 1,00,000 at a loss of ₹ 40,000
(c) Cash paid to a trade Creditor
(d) Payment of Outstanding Salaries
Ans – (b)
Particulars | ₹ |
Inventory (including loose tools ₹ 20,000) | 1,00,000 |
Trade Receivables 3,20,000 Less: Provision 20,000 | 3,00,000 |
Cash and Cash Equivalents | 60,000 |
Trade Payables | 1,70,000 |
Cash Credit from Bank | 20,000 |
Outstanding Rent | 10,000 |
Liquid Ratio will be:
(a) 2 : 1
(b) 2.2 : 1
(c) 1.8 : 1
(d) 1.9 : 1
Ans – (c)
A Company’s Current Ratio is 2.8 : 1; Current Liabilities are ₹ 2,00,000; Inventory is ₹ 1,50,000, and Prepaid Expenses are ₹ 10,000. Its Liquid Ratio will be:
(a) 3.6 : 1
(b) 2.1 : 1
(c) 2 : 1
(D) 2.05 : 1
ANS – (C)
A firm’s working capital is ₹ 2,70,000. Its current ratio is 3.5 : 2. Its Current Assets will be
(a) ₹ 6,30,000
(b) ₹ 3,37,500
(c) ₹ 8,50,000
(d) ₹ 3,50,000
Ans – (a)
The Quick Ratio of a company is 1 : 2. Which of the following transactions will result in an increase in this ratio?
(a) Cash received from debtors
(b) Sold goods on credit
(c) Purchase goods on credit
(d) Purchased goods on cash
Ans – (b)
On the basis of following data, the liquid ratio of a company will be: Current Ratio 5 : 3; Current Liabilities ₹ 75,000 and Inventory ₹ 25,000.
(a) 1 : 1
(b) 2 : 1.8
(c) 3 : 2
(d) 4 : 3
Ans – (d)
The Current Ratio is classified under the group of
a) Solvency Ratios
b) Liquidity Ratios
c) Activity Ratios
d) Profitability Ratios
Ans – b)
A firm’s current ratio is 3.5 2. Its current liabilities are ₹ 80,000. Its working capital will be:
(a) ₹ 1,20,000
(b) ₹ 1,60,000
(c) ₹ 60,000
(d) ₹ 2,80,000
Ans – (c)
A Company’s Current Ratio is 3 : 1 and Liquid Ratio is 1.2 : 1. If its Current Liabilities are ₹ 2,00,000, What will be the value of Inventory?
(a) ₹ 2,40,000
(b) ₹ 3,60,000
(c) ₹ 4,00,000
(d) ₹ 40,000
Ans – (b)
When current ratio is 4 : 1, Current Assets are ₹ 60,000 and Quick Ratio is 2.5 : 1, the amount of ‘Inventory’ will be:
(a) ₹ 22,500
(b) ₹ 37,500
(c) ₹ 15,000
(d) ₹ 25,000
Ans – (a)
Current Ratio of a Company is 2.5 : 1. If its working capital is ₹ 60,000. Its current liabilities will be:
(a) ₹ 40,000
(b) ₹ 60,000
(c) ₹ 1,00,000
(d) ₹ 24,000
Ans – (a)
A Company’s Current Assets are ₹ 6,00,000 and Working Capital is ₹ 2,00,000. Its Current Ratio will be:
(a) 3 : 1
(b) 1.5 : 1
(c) 2 : 1
(d) 4 : 1
Ans – (b)
Liquid Assets do not include:
(a) Trade Receivables
(b) Cash and Cash Equivalents
(c) Inventory
(d) Short term Investments
Ans – (c)
Which of the following points out the significance of ratio analysis?
a) It helps the business in identifying the problem areas.
b) It ignores price level changes.
c) It ignores qualitative aspects
d) All of the above
Ans – a)
A Company’s Current Ratio is 2.4 : 1 and Working Capital is ₹ 5,60,000. If its Liquid Ratio is 1.5, What will be the value of Inventory?
(a) ₹ 6,00,000
(b) ₹ 2,00,000
(c) ₹ 3,60,000
(d) ₹ 6,40,000
Ans – (c)
A Company’s Current Ratio is 2.5 : 1 and its Working Capital is ₹ 60,000. If its inventory is ₹ 52,000, What will be the Liquid Ratio?
(a) 2.3 : 1
(b) 2.8 : 1
(c) 1.3 : 1
(d) 1.2 : 1
Ans – (d)
The current ratio of a company is 1.8 : 1 and its Quick Ratio is 1.6 : 1. From the following transactions, pick out the transactions which involves an increase in both the current Ratio and Quick Ratio:
(a) Goods worth ₹ 10,000 sold at a loss of ₹ 2,000.
(b) Insurance premium of ₹ 3,000 paid in advance
(c) Plant and Machinery purchased for ₹ 9,000
(d) Bills Payable of ₹ 2,000 honoured on the due date
Ans – (d)
Current Ratio of Super Ltd. is 2 : 1. Which of the following transactions will result in decrease in this ratio?
(a) Payment of ₹ 40,000 to creditors
(b) Sale of furniture (book value ₹ 38,000) for ₹ 16,000 only
(c) Repayment of long term loan of ₹ 7,00,000
(d) Cash collected from debtors ₹ 1,18,000
Ans – (c)
Debentures ₹ 80,000, Trade Payables ₹ 1,20,000. Trade Receivables ₹ 90,000, Prepaid Expenses ₹ 10,000, Inventory ₹ 2,00,000 and Goodwill is ₹ 60,000. Current Ratio will be:
(a) 1.5 : 1
(b) 2.5 : 1
(c) 3 : 1
(d) 1.8 : 1
Ans – (b)
Current Ratio of Adaar Ltd. is 2.5 : 1. Accountant wants to maintain it at 2 : 1. Following options are available:
(i) he can repaid Bills Payable
(ii) He can Purchase Goods on Credit
(iii) He can take Short term Loan
Choose the correct option.
(a) Only (i) is correct
(b) Only (ii) is correct
(c) Only (i) and (iii) are correct
(d) Only (ii) and (iii) are correct
Ans – (d)
Equity Share Capital | ₹ 12,00,000 |
General Reserve | ₹ 5,00,000 |
Debenture Redemption Reserve | ₹ 1,00,000 |
Profit and Loss Balance | ₹ (2,00,000) |
Proprietary Ratio | 0.2 : 1 |
Total Assets will be:
(a) ₹ 3,20,000
(b) ₹ 75,00,000
(c) ₹ 3,00,000
(d) ₹ 80,00,000
Ans – (d)
Particulars | ₹ |
Equity Share Capital | 16,00,000 |
Reserve and Surplus | 8,00,000 |
General Reserve | 4,00,000 |
Profit and Loss Balance | (2,00,000) |
Proprietary Ratio | 0.8 : 1 |
Total Assets will be:
(a) ₹ 19,20,000
(b) ₹ 30,00,000
(c) ₹ 35,00,000
(d) ₹ 32,50,000
Ans – (b)
Current Ratio of Cadila Ltd. is 2.4 : 1. Accountant wants to maintain it at 2 : 1. Following options are available:
(i) He can repay the creditors
(ii) He can purchase goods on credit
(iii) He can take short term loan from the bank
Choose the Correct Option.
(a) Only (i) is correct
(b) Only (ii) is correct
(c) Only (i) and (iii) are correct
(d) Only (ii) and (iii) are correct
Ans – (d)
Calculate Fixed Assets from the following:
Share Capital ₹ 7,00,000; Reserves and Surplus ₹ 3,00,000; Current Assets ₹ 1,50,000; Proprietary Ratio 0.8 : 1.
(a) ₹ 12,50,000
(b) ₹ 11,00,000
(c) ₹ 14,00,000
(d) ₹ 6,50,000
Ans – (b)
The proprietary Ratio falls under the group of
a) Liquidity Ratios
b) Solvency Ratios
c) Activity Ratios
d) Profitability Ratios
Ans – b)
__ ratios are calculated to determine the ability of the business to service its debt int he long run.
(a) Liquidity
(b) Turnover
(c) Solvency
(d) Profitability
Ans – (c)
The _ of a business firm is measured by its ability to satisfy its short term obligations as they become due.
(a) Activity
(b) Liquidity
(c) Debt
(d) Profitability
Ans – (b)
Current Ratio is a type of
(a) Solvency Ratio
(b) Liquidity Ratio
(c) Activity Ratio
(d) Profitability Ratio
Ans – (b)
Ratio analysis can help know about the potential areas which can be improved with the effort in the desired direction.
a) True
b) False
c) Can’t say
d) Partially true
Ans – b)
Ideal Quick Ratio is:
(a) 1 : 1
(b) 1 : 2
(c) 1 : 3
(d) 2 : 1
Ans – (a)
Quick Assets do not include
(a) Cash in Hand
(b) Prepaid Expenses
(c) Marketable Securities
(d) Trade Receivables
Ans – (b)
The Quick Ratio of a company is 1 : 2. Which of the following transactions will result in an increase in this ratio?
(a) Cash received from debtors
(b) Sold goods on credit
(c) Purchased goods on credit
(d) Purchased goods on cash
Ans – (b)
Current Assets do not include:
(a) Prepaid Expenses
(b) Inventory
(c) Goodwill
(d) Bills Receivable
Ans – (c)
Inventory Turnover Ratio falls under the group of
a) Activity Ratios
b) Solvency Ratios
c) Profitability Ratios
d) Liquidity Ratios
Ans – a)
Liquid Assets include:
(a) Debtors
(b) Bills Receivable
(c) Bank Balance
(d) All of the above
Ans – (d)
Patents and Copyrights fall under the category of:
(a) Current Assets
(b) Liquid Assets
(c) Intangible Assets
(d) None of above
Ans – (c)
What will be the current Ratio from the following:
Liquid Assets ₹ 1,00,000; Inventory ₹ 90,000 (including loose tools ₹ 15,000); Prepaid Expenses ₹ 5,000; Working Capital ₹ 1,20,000.
(a) 1.5 : 1
(b) 3,25 : 1
(c) 3 : 1
(d) 1.625 : 1
Ans – (c)
A Company’s Liquid Assets are ₹ 6,00,000, Inventory is ₹ 1,50,000 and its Current Liabilities are ₹ 4,00,000. Subsequently, it purchased goods for ₹ 1,00,000 on credit. Quick Ratio will be _ .
(a) 1.5 : 1
(b) 1.2 : 1
(c) 1.4 : 1
(d) 1.7 : 1
Ans – (b)
Current Ratio is 2 : 1 and Quick Ratio is 0.5 : 1, a transaction involving decrease in both Current Ratio and Quick Ratio is
(a) Sale of Non-Current Asset for Cash
(b) Sale of Stock-in-Trade at loss
(c) Cash payment of a Current Liability
(d) Purchase of Stock-in-Trade on credit
Ans – (d)
Working capital is the excess of current assets over current liabilities.
a) True
b) False
c) Can’t say
d) Partially true
Ans – a)
Trade Receivables ₹ 40,000; Trade Payables ₹ 60,000; Prepaid Expenses ₹ 10,000; Inventory ₹ 1,00,000 and Goodwill is ₹ 15,000. Current Ratio will be:
(a) 1 : 2
(b) 2 : 1
(c) 2.33 : 1
(d) 2.5 : 1
Ans – (d)
Cash Balance ₹ 5,000; Trade Payables ₹ 40,000; Inventory ₹ 50,000; Trade Receivables ₹ 65,000 and Prepaid Expenses are ₹ 10,000. Liquid Ratio will be:
(a) 1.75 : 1
(b) 2 :1
(c) 3.25 : 1
(d) 3 : 1
Ans – (a)
Proprietary Ratio = ?
(a) Equity Share Capital/Total Assets
(b) Equity Share Capital + Preference Share Capital/Fixed Assets
(c) Shareholders’ Funds/Total Assets + Fictitious Assets
(d) Shareholders’ Funds/Total Assets + Fictitious Assets
Ans – (c)
Share Capital ₹ 8,00,000; Reserve and Surplus ₹ 4,00,000; General Reserve ₹ 1,00,000 and Total Assets ₹ 20,00,000. Proprietary Ratio will be:
(a) 0.4 : 1
(b) 0.55 : 1
(c) 0.6 : 1
(d) 0.65 : 1
Ans – (c)
Paras Ltd. as a Proprietary Ratio of 25%. To maintain this ratio at 30%, management may
(a) Increase Equity
(b) Reduce Debt
(c) Either Increase Equity or Reduce Debt
(d) Increase Current Assets
Ans – (c)
Current Assets ₹ 4,00,000; Current Liabilities ₹ 2,00,000 and Inventory is ₹ 50,000. Liquid Ratio will be:
(a) 2 : 1
(b) 2.25 : 1
(c) 4 : 7
(d) 1.75 : 1
Ans – (d)
Assuming Current Ratio of 1.4 : 1, Which of the following transactions will improve the Current Ratio:
(a) Cash Collected from Trade Receivables
(b) Purchase of goods for cash
(c) Payment to Trade Payables
(d) Credit purchase of goods
Ans – (c)
Assuming quick ratio of 1.2 : 1, Which of the following transactions will improve the quick ratio?
(a) Sale of goods for cash
(b) Sale of goods on credit
(c) Issue of new shares for cash
(d) All of the above
Ans – (d)
A company’s Current Ratio is 2 : 1. After Cash payment to some of its creditors, Current Ratio will:
(a) Decrease
(b) Increase
(c) As before
(d) None of these
Ans – (b)
A Company’s Current Assets are ₹ 8,00,000 and its current liabilities are ₹ 4,00,000. Subsequently, it purchased goods for ₹ 1,00,000 on credit. Current Ratio will be __.
(a) 2 : 1
(b) 2.25 : 1
(c) 1.8 : 1
(d) 1.6 : 1
Ans – (c)
Particulars | ₹ |
Operating Ratio | 80% |
Office Exp. | 40,000 |
Selling Exp. | 50,000 |
Revenue from Operations (Sales) | 10,00,000 |
Revenue from Operations Return (Sales Return) | 1,00,000 |
Cost of Revenue from Operations will be:
(a) ₹ 8,10,000
(b) ₹ 6,30,000
(c) ₹ 7,20,000
(d) ₹ 7,10,000
Ans – (b)
Particulars | ₹ |
Revenue from Operations | 10,00,000 |
Gross Profit | 40% |
Office and Administrative Expenses | 80,000 |
Selling Expenses | 70,000 |
Interest on Debentures | 30,000 |
If Revenue from Operations of a firm is ₹ 15,00,000, Gross Profit is ₹ 9,00,000 and Operating Expenses are ₹ 75,000. The Operating Profit Ratio will be
(a) 45%
(b) 50%
(c) 55%
(d) 65%
Ans – (c)
Operating Profit Ratio will be:
(a) 22%
(b) 75%
(c) 32%
(d) 25%
Ans – (d)
Young India Ltd. has an operating Profit Ratio of 20%. To maintain this ratio at 25%, management may
a) Increase selling price of a stock in trade
b) Reduce the cost of Revenue from operations
c) Increase selling price of a stock in trade and reduce the cost of revenue
from operations
d) All of the above.
Ans – d)
A company’s Current Assets are ₹ 3,00,000 and its current liabilities are ₹ 2,00,000. Subsequenlty, it paid ₹ 50,000 to its trade payables. Current Ratio will be __ .
(a) 2 : 1
(b) 1.67 : 1
(c) 1.25 : 1
(d) 1.5 : 1
Ans – (b)
Current Assets of a company were ₹ 1,00,000 and its current ratio was 2 : 1. After this the company paid ₹ 25,000 to a Trade Payable. The Current Ratio after the payment will be:
(a) 5 : 1
(b) 2 : 1
(c) 3 : 1
(d) 4 : 1
Ans – (c)
Current liabilities of a company were ₹ 2,00,000 and its current ratio was 2.5 : 1. After this the company paid ₹ 1,00,000 to a trade payable. The current ratio after the payment will be:
(a) 2 : 1
(b) 4 : 1
(c) 5 : 1
(d) None of the above
Ans – (b)
The quick ratio ______ the short-term financial position.
a) Higher, better
b) Lower, better
c) Higher, poorer
d) Lower; Poorer
Ans – a)
Which of the following is/are not included in Current Assets to calculate Current Ratio?
(a) Loose Tools and Stores and Spares
(b) Trade receivables (after 12 months or after Operating Cycle period from the date of Balance Sheet)
(c) Prepaid Expenses
(d) Both (a) and (b)
Ans – (d)
_________ is considered as an ideal current ratio.
a) 1 : 1
b) 4 : 1
c) 2 : 1
d) There is no such value
Ans – c)
The current Ratio is 2 : 1. On the sale of a fixed asset (Book value ₹ 40,000) for ₹36,000 on credit, state whether the current Ratio will
a) improve
b) Decline
c) Not change
d) Can’t say
Ans – a)
₹ | |
Cost of Revenue from Operations | 12,00,000 |
Inventory Turnover Ratio | 4 Times |
If opening inventory was one-third of closing inventory, the closing inventory will be:
(a) ₹ 2,25,000
(b) ₹ 4,50,000
(c) ₹ 4,00,000
(d) ₹ 1,50,000
Ans – (b)
On the basis of the following information, answer the question that follows:
₹ | |
Share Capital | 25,00,000 |
Reserves and Surplus | 6,00,000 |
Current Assets | 9,00,000 |
Non-Current Assets | 36,00,000 |
The Proprietary Ratio is
(a) 1.25 : 1
(b) 0.69 : 1
(c) 2.5
(d) None of these
Ans – (b)
If average inventory is ₹ 5,00,000 and closing inventory is two times more than that in the beginning, then the value of closing inventory will be
(a) ₹ 10,00,000
(b) ₹ 7,50,000
(c) ₹ 9,00,000
(d) None of these
Ans – (b)
If the Cost of Revenue from Operations is ₹ 2,00,000, the value of Opening Inventory is ₹ 40,000 and the value of Closing Inventory is ₹ 60,000, the inventory Turnover Ratio will be equal to
(a) 5 Times
(b) 4 Times
(c) 3.33 Times
(d) 2 Times
Ans – (b)
The ‘Inventory Turnover Ratio’ from the following information will be:
Revenue from Operations – ₹ 12,00,000
Average Inventory – ₹ 2,00,000
Gross Loss Ratio – 20%
(a) 6 Times
(b) 5 Times
(c) 7.2 Times
(d) 3 Times
Ans – (c)
Calculate Opening Inventory from the following information:
Inventory Turnover Ratio : 5 Times
Revenue from Operations : ₹ 1,00,000
Gross Profit : 25% of Cost of Revenue from Operations
Opening Inventory is ₹ 5,000 less than Closing Inventory
Options:
(a) ₹ 19,500
(b) ₹ 17,500
(c) ₹ 13,500
(d) ₹ 12,500
Ans – (c)
Opening Inventory ₹ 80,000; Closing Inventory ₹ 1,20,000; Purchases ₹ 5,00,000; Carriage ₹ 30,000; Wages ₹ 20,000; Salaries ₹ 10,000; Inventory Turnover Ratio will be:
(a) 5.5 Times
(b) 5.2 Times
(c) 5.6 Times
(d) 5.1 Times
Ans – (d)
Revenue from Operations (Sales) ₹ 8,00,000. Average Inventory : 1,00,000; Closing Inventory ₹ 1,20,000. The rate of Gross Loss on Revenue from Operations was 10%. Inventory Turnover Ratio will be:
(a) 7.2 Times
(b) 8 Times
(c) 8.8 Times
(d) 6 Times
Ans – (c)
If opening inventory is ₹ 1,20,000, Cost of Revenue from Operations is ₹ 10,00,000 and Inventory Turnover Ratio is 5 Times. then Closing Inventory will be
a) ₹ 3,20,000
b) ₹ 2,80,000
c) ₹ 1,60,000
d) ₹ 4,00,000
Ans – b)
A Company’s liquid assets are ₹ 10,00,000 and its current liabilities are ₹ 8,00,000. Subsequently, it purchased goods for ₹ 1,00,000 on credit. Quick ratio will be __ .
(a) 1.11 : 1
(b) 1.22 : 1
(c) 1.38 : 1
(d) 1.25 : 1
Ans – (a)
A Company’s liquid assets are ₹ 5,00,000 and its current liabilities are ₹ 3,00,000. Thereafter, it paid ₹ 1,00,000 to its trade payables. Quick ratio will be:
(a) 1.33 : 1
(b) 2.5 : 1
(c) 1.67 : 1
(d) 2 : 1
Ans – (d)
If current Ratio of a firm is 2.5:1 and its current liabilities are ₹ 4,00,000. Its working capital will be
a) ₹ 6,00,000
b) ₹ 7,50,000
c) ₹ 8,00,000
d) ₹ 14,00,000
Ans – a)
Non-current assets of a firm are ₹ 26,00,000, Current Assets are ₹ 9,00,000 and Shareholder’s Funds are ₹ 21,50,000. Total debts of the firm will be.
a) ₹ 43,50,000
b) ₹ 13,50,000
c) ₹ 21,50,000
d) ₹ 38,50,000
Ans – b)
Working Capital is ₹ 7,20,000; Trade Payables ₹ 40,000; Other current Liabilities ₹ 2,00,000; Calculate Current Ratio.
a) 2 : 1
b) 4 : 1
c) 5 : 1
d) 7 : 1
Ans – b)
Current Assets are ₹ 10,00,000; Inventories ₹ 5,00,000; Working Capital ₹ 6,00,000. Calculate Current Ratio.
a) 2.5 : 1
b) 1 : 1
c) 2 : 1
d) 1 : 2
Ans – a)
If Total Assets are ₹ 1,25,000, Total Debts, i.e., external debts are ₹ 1,00,000 and current liabilities are ₹ 50,000. Debt
Equity Ratio will be
a) 1 : 1
b) 1 : 2
c) 2 : 1
d) None of these
Ans – c)
If Credit Revenue from Operations of Gama Ltd. Is ₹ 3,50,000; Cash Revenue from Operations is ₹ 50,000, Cost of Revenue from Operations is ₹ 3,20,000, then its Gross Profit Ratio will be
(a) 15%
(b) 25%
(c) 16%
(d) 20%
Ans – (d)
On the basis of following data, a Company’s Gross Profit Ratio will be:
Net Profit ₹ 80,000; Wages ₹ 10,000; Office Expenses ₹ 30,000; Selling Expenses ₹ 20,000; Total Revenue from Operations ₹ 5,00,000.
(a) 28%
(b) 26%
(c) 4%
(d) 6%
Ans – (b)
If Credit Revenue from Operations is ₹ 7,00,000, Cash Revenue from Operations is ₹ 1,00,000. Cost of Revenue from Operations
is ₹ 6,40,000, then Gross Profit Ratio will be
a) 15%
b) 18%
c) 25%
d) 20%
Ans – d)
If Revenue from Operations is ₹ 1,60,000 and Gross Profit is ₹ 40,000, Gross Profit Ratio will be
a) 30%
b) 25%
c) 40%
d) 50%
Ans – b)
If Revenue from Operations is ₹ 2,50,000 and Gross Profit Ratio is 25%, the amount of Gross Profit will be
(a) ₹ 60,000
(b) ₹ 62,500
(c) ₹ 80,000
(d) ₹ 50,000
Ans – (b)
Name the difference between Revenue from Operations and Operating Profit:
(a) Gross Profit
(b) Operating Profit
(c) Operating Cost
(d) Net Profit before Tax
Ans – (c)
________ indicate the speed at which activities of the business are being performed.
(a) Liquidity Ratios
(b) Turnover Ratios
(c) Solvency Ratios
(d) Profitability Ratios
Ans – (b)
What will be the Operating Ratio of Zenia Ltd. from the particulars given below?
Revenue from Operations : ₹ 9,00,000
Gross Profit : 20% on cost
Operating Expenses : ₹ 60,000
(a) 86.67%
(b) 90%
(c) 76.67%
(d) 20%
Ans – (b)
Revenue from Operations (Sales) ₹ 8,00,000; G.P. 25% on Cost; Office Exp. ₹ 25,000; Selling Exp. ₹ 15,000; Loss on Sale of Plant ₹ 10,000. Operating Ratio will be:
(a) 85%
(b) 86.25%
(c) 80%
(d) 81.25%
Ans – (a)
Particulars | ₹ |
Credit Revenue from Operations | 15,00,000 |
Cash Revenue from Operations | 10,00,000 |
Employee Benefit Expenses | 3,00,000 |
Selling and Distribution Expenses | 2,00,000 |
Loss on Sale of Machinery | 1,00,000 |
Gross Profit Ratio | 40% |
Operating Ratio will be:
(a) 80%
(b) 84%
(c) 60%
(d) 64%
Ans – (a)
Revenue from Operations ₹ 9,00,000, Gross Profit 25% on Cost, Operating Expenses ₹ 90,000, Operating Ratio will be
a) 100%
b) 50%
c) 90%
d) 10%
Ans – c)
From the following, which ratio is not a part of Profitability Ratio:
(a) Proprietary Ratio
(b) Gross Profit Ratio
(c) Operating Ratio
(d) Net Profit Ratio
Ans – (a)
Which of the following will increase Quick Ratio without affecting Current Ratio?
(a) Sale of Stock at Loss
(b) Sale of Stock at Profit
(c) Sale of Non-Current Investment at Cost
(d) Sale of Stock at Cost
Ans – (d)
A higher total asset to debt ratio is beneficial as it indicates a larger
the safety margin for lenders.
a) True
b) False
c) Can’t say
d) Partially True
Ans – a)
A transaction involving a decrease in Debt-Equity Ratio and increase in Current Ratio is
a) Issue of Debentures against in purchase of fixed assets
b) Issue of Debentures for cash
c) Redemption of Preference shares for cash
d) Issue of Equity shares for cash
Ans – d)
_______ will result in increase in Liquid Ratio without affecting the Current Ratio.
(a) Sale of Stock at cost price
(b) Sale of Stock at loss
(c) Sale of stock at profit
(d) Sale of Investment at cost
Ans – (a)
_______ means the firm’s ability to meet its long-term liabilities.
a) Solvency
b) Liquidity
c) Efficiency
d) None of the above
Ans – a)
_____ is also known as Acid-Test Ratio.
(a) Current Ratio
(b) Quick Ratio
(c) Gross Profit Ratio
(d) Operating Ratio
Ans – (b)
A transaction involving an increase in Current Ratio but no change in Working Capital:
(a) Purchase of goods on credit
(b) Cash payment of Non-current Liability
(c) Payment to a Trade Creditor
(d) Sale of Fixed Assets for Cash
Ans – (c)
Which of the following formulae can be applied to calculate Equity?
P Capital Employed less Working Capital
Q Total Assets less Total Debts
R Share Capital + Reserves and Surplus + Working Capital
S Non-Current Assets + Working Capital less Non-Current Liabilities
(a) P and Q
(b) Q and S
(c) P, Q and R
(d) P, Q R and S
Ans – (b)
A transaction involving an increase in Debt-Equity Ratio and no change in Current Ratio is
(a) Issue of Debentures for cash
(b) Redemption of preference shares for cash
(c) Issue of shares for cash
(d) Issue of Debentures against the purchase of a fixed asset
Ans – (d)
Shareholders’ Funds or Equity is
(a) Equity Share Capital + Preference Share Capital + Reserves and Surplus
(b) Share Capital + Reserves and Surplus
(c) Non-Current Assets + Current Assets – Current Liabilities – Non-Current Liabilities
(d) All of the above
Ans – (d)
Which of the following four companies is not deriving the benefit of ‘trading on equity’?
(a) Mars Ltd., which has a Debt-Equity Ratio of 0.49 : 1
(b) Venus Ltd., which has a Debt-Equity Ratio of 1.54 : 1
(c) Saturn Ltd., which has a Debt-Equity Ratio of 1.62 : 1
(d) Pluto Ltd., which has a Debt-Equity Ratio of 2.32 : 1
Ans – (a)
If Capital Employed is ₹ 4,00,000, Total Debt is ₹ 2,50,000 and Current Liability is ₹ 1,00,000, Debt-Equity Ratio will be
(a) 5 : 3
(b) 3 : 5
(c) 1 : 1
(d) 8 : 5
Ans – (b)
Which of the following ratios measure the short term solvency of an
a) Current Ratio
b) Liquid Ratio
c) Debt Equity Ratio
d) Both a) and b)
Ans – d)
Working Capital Turnover Ratio falls under the group of
a) Activity Ratios
b) Solvency Ratios
c) Liquidity Ratios
d) Profitability Ratios
Ans – a)
Fixed Assets ₹ 3,00,000; Liquid Assets ₹ 1,80,000; Inventory ₹ 70,000; Current Liabilities ₹ 50,000; Cost of Revenue from Operations ₹ 8,00,000; G.P. 25% of Cost. Working Capital Turnover Ratio will be:
(a) 2 times
(b) 4.8 times
(c) 4 times
(d) 5 times
Ans – (d)
A transaction involving decrease in both Current Ratio and Quick Ratio is
(a) Sale of Non-Current Asset for Cash
(b) Sale of Stock-in-Trade at loss
(c) Cash payment of a Non-Current Liability
(d) Purchase of Stock-in-Trade (goods) on credit
Ans – (c)
A transaction involving decrease in Current Ratio and an increae in Quick Ratio:
(a) Purchase of Stock-in-Trade for cash
(b) Sale of Non-Current Assets for Cash
(c) Sale of Stock-in-Trade at loss
(d) Cash payment of Non-current Liability
Ans – (c)
A transaction involving increase in both current Ratio and Quick Ratio:
(a) Purchase of Stock-in-Trade on Credit
(b) Sale of Stock at Loss
(c) Cash payment of Non-current Liability
(d) Sale of Non-current Asset for Cash
Ans – (d)
Particulars | ₹ |
Net Revenue from Operations | 20,00,000 |
Credit Revenue from Operations | 10,00,000 |
Gross Profit | 6,00,000 |
Office Expenses | 2,00,000 |
Selling Expenses | 1,00,000 |
Loss by Fire | 2,00,000 |
Operating Ratio will be:
(a) 70%
(b) 85%
(c) 90%
(d) 95%
Ans – (b)
_____________ + Operating Profit ratio (%) = 100.
a) Operating Ratio (%)
b) Gross Profit Ratio
c) Net Profit Ratio
d) None of these
Ans – a)
____________ Provides an approximation of the average time that it takes to collect debtors.
a) Average Collection period
b) Average payment period
c) Debtors turnover ratio
d) None of the above
Ans – a)
Name the aggregate of Shareholders’ Funds and Total Debts:
(a) Total Debts
(b) Capital Employed
(c) Total Assets
(d) Non-Current Assets
Ans – (c)
In calculating Interest Coverage Ratio, net profit considered is
(a) Profit after Tax
(b) Profit after Interest
(c) Profit before Tax
(d) Profit before Interest and Tax
Ans – (d)
From the following, Calculate Interest Coverage Ratio:
Net Profit after Tax ₹ 12,00,000; 10% Debentures ₹ 1,00,00,000; Tax Rate 40%.
(a) 1.2 Times
(b) 3 Times
(c) 2 Times
(d) 5 Times
Ans – (b)
Bhumi Ltd. has a Current Ratio of 3 : 1. if its stock is ₹ 40,000 and total current liabilities are ₹ 75,000, the amount of Current Assets of Bhumi Ltd. will be
(a) ₹ 75,000
(b) ₹ 2,25,000
(c) ₹ 25,000
(d) ₹ 98,500
Ans – (b)
While calculating Return on Investment, net profit before interest and tax will not include
(a) Interest on Trade Investment
(b) Interest on Non-trade Investment
(c) Neither (a) nor (b)
(d) Commission received by a company
Ans – (b)
Return on Investment falls under the group of
a) Liquidity Ratios
b) Profitability Ratios
c) Solvency Ratios
d) Activity Ratios
Ans – b)
Operating Ratio falls under the group of
a) Activity Ratios
b) Liquidity Ratios
c) Solvency Ratios
d) Profitability Ratios
Ans – d)
Which one of the following is correct?
(i) Quick Ratio can be more than Current Ratio
(ii) High Inventory Turnover Ratio is good for the organisation, except when goods are bought in small lots or sold quickly at low margins to realise cash.
(iii) Sum of Operating Ratio and Operating Profit Ratio is always 100%
(iv) Sum of Operating Ratio and Operating Profit Ratio is always 100%
(a) All are correct
(b) Only (i) and (iii) are correct
(c) Only (ii) and (iii) are correct
(d) Only (i) and (ii) are correct
Ans – (c)
From the following information, calculate Return on Investment (ROI):
₹ | |
Net Profit after Interest and Tax | 8,10,000 |
9% Debentures | 30,00,000 |
Capital Employed | 60,00,000 |
Tax @ 40% |
(a) 27%
(b) 22%
(c) 19.85%
(d) 15%
Ans – (a)
Net Profit after Interest and Tax of X Ltd. was ₹ 1,20,000. Its Current Assets were ₹ 6,00,000 and Current Liabilities were ₹ 2,00,000. Tax rate was 40%. its Total Assets were ₹ 12,00,000 and 10% Long Term Debts was ₹ 4,00,000.
Return on Investment will be:
(a) 15%
(b) 24%
(c) 34%
(d) 60%
Ans – (b)
Which of the following is not a type of Accounting Ratio?
(a) Statement of Profit and Loss Ratio
(b) Statement of Cash Flow Ratio
(c) Balance Sheet Ratio
(d) Composite Ratio
Ans – (B)
Net Profit after Interest but before Tax ₹ 30,000; Shareholders’ Funds ₹ 3,00,000; 10% Long-term Debt ₹ 1,00,000. Tax Rate was 40%. Return on Investment will be:
(a) 10%
(b) 12.5%
(c) 15%
(d) 21.25%
Ans – (a)
Net Profit after tax is ₹ 1,20,000; 10% Debentures are of ₹ 2,00,000; Capital Employed is ₹ 16,00,000. Rate of Tax 40%.
Return on Investment (ROI) will be
(a) 20%
(b) 25%
(c) 22%
(d) 13.75%
Ans – (d)
Sincere Ltd. has Proprietary Ratio of 25%. To maintain this ratio of 30% management may
(a) Increase Equity
(b) Reduce Debt
(c) Either Increase Equity or Reduce Debt
(d) Increase Current Assets
Ans – (c)
The correct formula for computing Earning Per share is:
(a) Net Profit after Tax/No. of Shares
(b) Net Profit after Tax and Preference Dividend/No. of Shares
(c) Net Profit after Tax and Preference Dividend/No. of Equity Shares
(d) Net Profit after Tax and Preference Dividend/No. of Preference Shares
Ans – (c)
Which ratio can be used as basis for predicting the future value of equity shares?
(a) Price Earning Ratio
(b) Earning Per Share (EPS)
(c) Neither (a) nor (b)
(d) Dividend Yield Ratio
Ans – (a)
From the following information, the ‘Proprietor’s Funds’ are:
Particulars | ₹ |
Current Assets | 20,00,000 |
Non-Current Assets | 40,00,000 |
Long-Term Borrowings | 25,00,000 |
Proprietary Ratio | 25% |
Proprietary Ratio
(a) ₹ 10,00,000
(b) ₹ 14,00,000
(c) ₹ 24,00,000
(d) ₹ 15,00,000
Ans – (d)
On the basis of following data, the proprietary ratio of a Company will be:
Equity Share Capital ₹ 6,00,000; Debentures ₹ 2,40,000; Statement of Profit and Loss Debit Balance ₹ 40,000.
(a) 74%
(b) 65%
(c) 82%
(d) 70%
Ans – (d)
On the basis of following information received from a firm, its Proprietary Ratio will be:
Non-Current Assets ₹ 3,30,000; Current Assets ₹ 1,90,000; Preliminary Expenses ₹ 30,000; Equity Share Capital ₹ 2,44,000; Preference Share Capital ₹ 1,70,000; Reserve Fund ₹ 58,000.
(a) 70%
(b) 80%
(c) 85%
(d) 90%
Ans – (c)
On the basis of following data, a Company’s Total Assets-Debt Ratio will be: Working Capital ₹ 4,50,000; Current Liabilities ₹ 1,50,000; Non-Current Assets ₹ 4,00,000; Debentures ₹ 2,00,000; Long Term Bank Loan ₹ 50,000.
(a) 5 : 1
(b) 4 : 1
(c) 2.5 : 1
(d) 20 : 1
Ans – (b)
On the basis of following information received from a firm, its Total Assets-Debt Ratio will be:
Shareholders’ Funds ₹ 2,00,000; Dr. Balance of Profit and Loss ₹ 50,000; Current Liabilities ₹ 1,00,000; Current Assets ₹ 2,00,000; Total Assets ₹ 6,00,000.
(a) 2 : 1
(b) 1.5 : 1
(c) 3 : 1
(d) 1.71 : 1
Ans – (a)
Which ratio indicates the proportion of assets financed out of shareholders’ funds?
(a) Debt Equity Ratio
(b) Fixed Assets Turnover Ratio
(c) Proprietary Ratio
(d) Total Assets to Debt Ratio
Ans – (c)
Long term solvency is indicated by:
(a) Current Ratio
(b) Quick Ratio
(c) Net Profit Ratio
(d) Debt/Equity Ratio
Ans – (d)
The formula for calculating the Debt Equity Ratio is:
(a) Short-term Debts/Shareholders’ Funds
(b) Shareholders’ Funds/Non-Current Assets
(c) Short term + Long Term Debts/Shareholders’ Funds
(d) None of the above
Ans – (d)
Equity Share Capital ₹ 20,00,000; Reserve 5,00,000; Debentures ₹ 10,00,000; Current Liabilities ₹ 8,00,000. Debt-equity ratio will be:
(a) .4 : 1
(b) .32 : 1
(c) .72 : 1
(d) .5 : 1
Ans – (a)
Long-term Borrowings | ₹ 24,00,000 |
10% Debentures | ₹ 12,00,000 |
Bills Payable | ₹ 3,00,000 |
Debt-Equity Ratio | 1.2 |
Shareholder’s Funds will be:
(a) ₹ 20,00,000
(b) ₹ 28,80,000
(c) ₹ 30,00,000
(d) ₹ 32,50,000
Ans – (a)
Debt equity ratio of a company is 1 : 2. which of the following transactions will increase it:
(a) Issue of new shares for cash
(b) Redemption of Debentures
(c) Issue of Debentures for Cash
(d) Goods Purchased on credit
Ans – (c)
Satisfactory ratio between Long-term Debts and Shareholders’ Funds is:
(a) 1 : 1
(b) 3 : 1
(c) 1 : 2
(d) 2 : 1
Ans – (d)
Particulars | ₹ |
Share Capital | 20,00,000 |
General Reserve | 5,00,000 |
Surplus | (1,00,000) |
Debt-Equity Ratio | 2. 5 : 1 |
Long-term Debts will be:
(a) ₹ 9,60,000
(b) ₹ 60,00,000
(c) ₹ 65,00,000
(d) ₹ 62,50,000
Ans – (b)
Debt Equity Ratio is:
(a) Liquidity Ratio
(b) Solvency Ratio
(c) Activity Ratio
(d) Operating Ratio
Ans – (b)
Debt Equity Ratio is:
(a) Long Term Debts/Shareholders’ Funds
(b) Short Term Debts/Equity Capital
(c) Total Assets/Long term Debts
(d) Shareholder’s Funds/Total Assets
Ans – (a)
Which of the following is not a Solvency Ratio?
(a) Interest Coverage Ratio
(b) Return on Investment
(c) Debt to Capital Employed Ratio
(d) Total Asset to Debt Ratio
Ans – (b)
A lower trade receivable ratio indicates the inefficient credit sales policy
of the management.
a) True
b) False
c) Can’t say
d) Partially true
Ans – a)
The purchase of goods ₹ 40,000 for cash will increase the operating ratio.
a) True
b) False
c) Can’t say
d) Partially True
Ans – a)
Revenue from Operations ₹ 10,00,000, Average Inventory ₹ 1,25,000, Gross Loss on Sales 25%. Find Inventory Turnover Rati.
(a) 8 Times
(b) 10 Times
(c) 2 Times
(d) None of these
Ans – (b)
Proprietary Ratio is:
(a) Long term Debts/Shareholders’ Funds
(b) Total Assets/Shareholders’ Funds
(c) Shareholders’ Funds/Total Assets
(d) Shareholders’ Funds/Non-Current Assets
Ans – (c)
Non-Current Assets ₹ 5,00,000; Current Assets ₹ 3,00,000; Equity Share Capital ₹ 4,00,000; Reserve ₹ 2,00,000; Long-term Debts ₹ 40,000. Proprietary Ratio will be:
(a) 75%
(b) 80%
(c) 125%
(d) 133%
Ans – (a)
If Debts equity ratio exceeds __, it indicates risky financial position.
(a) 1 : 1
(b) 2 : 1
(c) 1 : 2
(d) 3 : 1
Ans – (b)
In Debts Equity Ratio, Debt refers to:
(a) Short term Debts
(b) Long Term Debts
(c) Total Debts
(d) Debentures and Current Liabilities
Ans – (b)
Proprietary Ratio indicates the relationship between Proprietor’s Funds and _______ .
(a) Long-term Debts
(b) Short Term and Long Term Debts
(c) Total Assets
(d) Debentures
Ans – (c)
To assess the Operating efficiency with which resources are utilised, we may use
(a) Gross Profit Ratio
(b) Inventory Turnover Ratio
(c) Working Capital Turnover Ratio
(d) (b) & (c)
Ans – (d)
Provision for Doubtful Debts is deducted from Trade Receivables while computing
a) Current Ratio
b) Quick Ratio
c) Trade Receivables Turnover Ratio
d) a) and b)
Ans – d)
If current assets and current liabilities are both reduced by the same amount, the current ratio will
a) increase
b) Decrease
c) No change
d) Either a) or b)
Ans – a)
Inventory in the beginning of the year is ₹ 1,20,000 and at the end is ₹ 2,00,000. Inventory Turnover Ratio is 8 Times. The Revenue from Operations is 25% above cost. The Gross Profit will be
(a) ₹ 2,40,000
(b) ₹ 3,20,000
(c) ₹ 4,00,000
(d) ₹ 3,60,000
Ans – (b)
Which of the following are known as Efficiency Ratios?
(a) Liquidity Ratio
(b) Solvency Ratio
(c) Activity Ratios
(d) Profitability Ratios
Ans – (c)
From the following information, calculate Proprietary Ratio: Share Capital ₹ 5,00,000, Non-Current Assets ₹ 22,00,000,
Reserves and Surplus ₹ 3,00,000, Current Assets ₹ 10,00,000.
a) 100%
b) 70%
c) 40%
d) 25%
Ans – d)
Given that:
Opening Inventory – ₹ 1,20,000
Purchases – ₹ 9,00,000
Return Outward – ₹ 40,000
and the closing inventory is ₹ 20,000 less than opening inventory, then, Inventory Turnover Ratio is:
a) 5 Times
b) 7 Times
c) 8 Times
d) 10 Times
Ans – c)
If LR Ltd has Total Debts of ₹ 3,70,000, Long Term Debts of ₹ 2,00,000 and working capital of ₹ 1,80,000 then its current Ratio
will be _ .
a) 2.6 : 1
b) 3.2 : 1
c) 2.06 : 1
d) 1.03 : 1
Ans – c)
A firm’s current ratio is 1.75 : 1. If current liabilities are ₹ 80,000, then its working capital will be:
a) ₹ 1,20,000
b) ₹ 1,60,000
c) ₹ 60,000
d) ₹ 2,80,000
Ans – c)
A firm’s working capital is ₹ 90,000. Its current ratio is 3.5 : 2. Its current assets will be:
a) ₹ 1,35,000
b) ₹ 3,15,000
c) ₹ 2,10,000
d) ₹ 1,80,000
Ans – c)
A firm’s current assets are ₹ 3,60,000, current ratio is 3 : 1. Cost of revenue from operations is ₹ 12,00,000. Its working
capital turnover ratio will be:
a) 3 times
b) 5 times
c) 8 times
d) 4 times
Ans – b)
Given that:
Current Ratio 2.5
Quick Ratio 1.5
Working Capital ₹60,000
The value of current liabilities will be:
a) ₹ 15,000
b) ₹ 40,000
c) ₹ 60,000
d) ₹ 1,00,000
Ans – b)
The current ratio of Vidur Pvt Ltd is 3:2. The accountant wants to maintain it at 2:1. Following options are available.
i) He can repay bills payable
ii) He can take short term loan
iii) He can purchase goods on credit
Choose the correct option.
a) Only i) is correct
b) only ii) is correct
c) only i) and iii) are correct
d) Only ii) and iii) are correct
Ans – a)
The net revenue from operations of venus Ltd. is ₹ 35,00,000. Its Gross Profit is ₹ 22,50,000, Operating expenses are ₹ 1,87,500, commission received is ₹ 12,500 and profit on sale of fixed assets is ₹ 25,000. The operating Profit Ratio of Venus Ltd. will be
(a) 59. 29%
(b) 58.29%
(c) 60%
(d) 58.93%
Ans – (a)
The particulars of Alpha Ltd. are given below:
₹ | |
Equity Share Capital | 2,00,000 |
5% Preference Share Capital | 60,000 |
General Reserve | 1,20,000 |
Fixed Assets | 5,05,000 |
Current Assets | 1,20,000 |
Current Liabilities | 40,000 |
Loan @ 10% Interest | 5,00,000 |
Tax provided during the year | 30,000 |
Profit for the current year after interest and tax (available for the shareholders) | 90,000 |
(A) The Interest Coverage Ratio of the company will be
(a) 1.8 times
(b) 2.8 times
(c) 3.4 times
(d) 2.4 times
Ans – (c)
(B) The Proprietary Ratio of the company will be
(a) 0.47 : 1
(b) 0.75 : 1
(c) 0.61 : 1
(d) 0.38 : 1
Ans – (b)
The operating profit ratio is classified under the group of
a) Profitability Ratios
b) Solvency Ratios
c) Liquidity Ratios
d) Activity Ratios
Ans – a)
The difference between Total Assets and Current liabilities is
a) Total Assets
b) Total Debts
c) Capital Employed
d) Shareholders Funds
Ans – c)
A ratio reflects quantitative as well as qualitative aspects of results.
a) True
b) False
c) Can’t say
d) Partially True
Ans – b)
Ratios are comparable even if different accounting policies and procedures
are followed by different firms
a) True
b) False
c) Can’t say
d) Partially true
Ans – b)
Raj Ltd. has a Current Ratio of 3 : 1. If its Stock is ₹ 40,000 and total Current Liabilities are ₹ 75,000, the amount of Quick Assets of Raj Ltd. will be
(a) ₹ 1,85,000
(b) ₹ 1,75,000
(c) ₹ 1,65,000
(d) ₹ 1,50,000
Ans – (a)
The aggregate of Non-current Assets and Current Asset is
a) Quick Assets
b) Total Assets
c) Total Debts
d) Capital Employed
Ans – b)
Liquidity ratios assess the enterprise’s ability to meet its _
financial obligations.
a) Short term
b) Long term
c) Both a) and b)
d) None of these
Ans – a)
What will be the effect on the current ratio if a bills payable is discharged on
maturity.
a) it will increase
b) it will decrease
c) Either a) or b)
d) Can’t say
Ans – a)
Which of the following is not true?
a) Gross profit = Revenue from operations – Cost of Revenue from operations
b) Operating Profit = Revenue from Operations – Operating Cost.
c) Equity – Total Assets – Total Debts
d) Equity = Capital Employed + Debt
Ans – d)
A transaction involving a decrease in both current Ratio and Quick Ratio is
a) Sale of Noncurrent Asset for cash
b) Sale of Stock in Trade at a loss
c) Cash payment of a Non-current Liability
d) Issue of Bonus Shares
Ans – c)
Which of the following is/are not the components of quick assets.
a) Inventories
b) Prepaid expenses
c) Cash and cash equivalents
d) Both a) and b)
Ans – d)
Which of the following ratios measure the long-term solvency of an organization.
a) Debt-quity ratio
b) Liquid ratio
c) Proprietary ratio
d) Both a0 and c)
Ans – d)
From the given particulars of Zee Ltd., the Trade Receivables Turnover Ratio of the company will be:
₹ | |
Revenue from Operations | 30,00,000 |
Cash Revenue from Operations | 25% of Credit Revenue from Operations |
Gross Debtors | 4,75,000 |
Billls Receivable | 1,25,000 |
Provision for Doubtful Debts | 25,000 |
(a) 3.75 times
(b) 4 times
(c) 4.17 times
(d) 8 times
Ans – (b)
Which of the following is not an Activity Ratio?
a) Inventory Turnover Ratio
b) Interest coverage Ratio
c) Working Capital Turnover Ratio
d) Trade Receivables Turnover Ratio
Ans – b)
The is a measure of liquidity which excludes _______ generally the least liquid asset.
a) Current ratio, trade receivables
b) liquid ratio, trade receivables
c) current ratio, inventory
d) liquid ratio, inventory
Ans – d)
A very high current ratio implies heavy investment in current assets which is not a good sign
as it reflects under-utilization or improper utilization of resources.
a) True
b) False
c) Can’t say
d) Partially true
Ans – a)
The debt Equity ratio is the relationship between
a) Long term debts and share capital
b) Long term debts and shareholders Funds
c) Long term debts and Total Assets
d) Long term debts and working capital
Ans – b)
Interest Coverage Ratio is the relationship between
a) Net Profit and interest charge
b) Gross Profit and interest charge
c) Profit before interest and tax and interest on long term Borrowings
d) Profit after interest and tax and interest on Long term Borrowings
Ans – c)
Purchase of machinery for cash will _ the quick ratio.
a) increase
b) Decrease
c) No change
d) Either a) or b)
Ans – b)
Generally, a lower current ratio is considered better.
a) True
b) False
c) Can’t say
d) Partially True
Ans – b)
The difference between Revenue from Operations and Operating Profit is
a) Gross Profit
b) Operating Profit
c) Operating cost
d) Net Profit before tax
Ans – c)
Out of the following, a ratio that is not a part of the Profitability Ratio is
a) Proprietary Ratio
b) Gross Profit Ratio
c) Operating Ratio
d) Net Profit Ratio
Ans – a)
If Share Capital ₹ 4,00,000, Reserves and Surplus ₹ 1,50,000, Non-current Assets ₹ 18,00,000, Current Assets ₹ 4,00,000,
then proprietary ratio will be:
a) 12%
b) 25%
c) 8.33%
d) None of the above
Ans – b)
The ______ ratio provides information critical to the long-run operation of the firm.
a) Liquidity
b) activity
c) solvency
d) Profitability
Ans – c)
1:1 is the ideal quick ratio
a) True
b) False
c) Can’t say
d) Partially true
Ans – a)
The two basic measures of operational efficiency of a company are
a) Inventory Turnover Ratio and Working Capital Turnover Ratio
b) Liquid Ratio and Operating Ratio
c) Liquid Ratio and Current Ratio
d) Gross Profit Margin and Net profit margin
Ans – a)
_______ ratios are calculated for measuring the efficiency of operations of business based on effective utilization of resources.
a) Liquidity ratios
b) Solvency ratios
c) Activity ratios
d) None of these
Ans – c)
Inventory turnover ratio shows the relationship between the _ during a given period and the _ carried during the period.
a) Cost of revenue from operations: average inventory.
b) cost of revenue from operations, closing inventory
c) cost of revenue from operations, opening inventory
d) None of the above
Ans – a)
Name the difference between Capital Employed and Non-current Liabilities.
a) Shareholder’s funds
b) Capital Employed
c) Total Debts
d) Total Assets
Ans – a)
The profitability Ratio in relation to investment is
a) Gross Profit Ratio
b) Operating Profit Ratio
c) Operating Ratio
d) Return on Investment
Ans – d)
If P Ltd obtains a Bank loan of ₹ 30,00,000 payable after 5 years, then its proprietary ratio will
a) Increase
b) Decrease
c) No change
d) Either a) or b)
Ans – b)
The debt-equity ratio expresses the relationship between short-term debt and equity share capital of an enterprise.
a) True
b) False
c) can’t say
d) Partially True
Ans – b)
The objective of the Current Ratio is
a) To assess the firm’s ability to meet its short-term liabilities on time.
b) To assess the ability of the firm to meet its current liabilities
immediately
c) To assess the ability of the firm to meet its long term liabilities
d) to measure the proportion of total assets funded by the shareholders
Ans – a)
The ratio that measures the relationship between operating profit and Revenue from operations are
a) Operating Ratio
b) Operating Profit Ratio
c) Gross Profit ratio
d) Net Profit Raito
Ans – b)
Purchase returns amounting to ₹ 20,000 will deteriorate the inventory turnover ratio.
a) True
b) False
c) Can’t say
d) Partially true
Ans – b)
________ are especially interested in the average payment period since it provides them with a sense of the bill paying patterns of the firm.
a) Customers
b) Stockholders
c) Lenders and suppliers
d) Borrowers and buyers
Ans – c)
Which of the following is not correct?
a) Equity = Capital Employed + Debt
b) Equity = Share capital + Reserves and Surplus
c) Debt = Long term Borrowings + Long term provisions
d) Working Capital = Current Assets – Current Liabilities
Ans – a)
A transaction that does not change both the Current Ratio and Quick Ratio is
a) Sale of Stock in Trade at a loss
b) Cash payment of a Non-current liability
c) Cash received from trade debtors
d) Sale of furniture for cash
Ans – c)
Low __ may be due to bad buying behavior, obsolete stock, and is a danger signal.
a) average payment period
b) Inventory turnover ratio
c) average collection period
d) quick ratio
Ans – a)
A very high working capital turnover ratio may be a sign of _________
a) under-trading
b) overtrading
c) Optimal-trading
d) None of these
Ans – b)
The _____ may indicate that the firm is experiencing stockouts and lost sales.
a) Average Payment Period
b) Inventory Turnover Ratio
c) Average Collection Period
d) Quick Ratio
Ans – b)
While computing the current Ratio, Current Assets does not include:
a) Loose tools and stores and spares
b) Provision for Bad Debts
c) Prepaid Expenses
d) Both a) and b)
Ans – d)
The ________ ratios are primarily measures of return.
a) activity
b) profitability
c) liquidity
d) debt
Ans – b)
Interest coverage ratio depicts the relationship between net profit before interest and tax and interest payable on long-term debts.
a) True
b) False
c) can’t say
d) Partially true
Ans – a)
If Current Assets are ₹ 12,00,000; working Capital is ₹ 7,20,000; Inventories are ₹ 3,60,000, Liquid Ratio will be:
(a) 2.5 : 1
(b) 1 : 1
(c) 1.75 : 1
(d) 2 : 1
Ans – (c)
Which of the following will increase the liquid ratio without affecting current
ratio?
a) Sale of stock at a loss
b) Sale of stock at a profit
c) Sale of investment at cost
d) Sale of stock at cost
Ans – d)
A company extends credit terms of 45 days it its customers, its credit collection would be considered poor if its average
collection period was:
a) 30 days
b) 52 days
c) 41 days
d) 36 days
Ans – b)
Cost of Revenue from operations ₹ 15,00,000, Current Assets ₹ 4,00,000, Current Liabilities ₹ 1,50,000. Find its Working
Capital Turnover Ratio.
a) 3.75 times
b) 5 times
c) 6 times
d) 10 times
Ans – c)
If selling price is fixed 25% above the cost, the Gross Profit Ratio is:
a) 13%
b) 28%
c) 26%
d) 20%
Ans – d)
Net Revenue from Operation ₹ 4,00,000, Average inventory ₹ 50,000, Gross Loss on sales 25%. Find Inventory Turnover Ratio:
a) 8 times
b) 10 times
c) 2 times
d) None of these
Ans – b)
A Company’s Current Ratio is 3 : 1; Current Liabilities are ₹ 2,00,000; Inventories are ₹ 1,50,000 and Prepaid Expenses are ₹
10,000. Its Liquid Ratio will be:
a) 3.6 : 1
b) 2.2 : 1
c) 3 : 2
d) 2.05 : 1
Ans – b)
A firm’s current ratio is 1.8 : 1. Its current liabilities are ₹ 80,000. Its working capital will be:
a) ₹ 1,20,000
b) ₹ 1,60,000
c) ₹ 64,000
d) ₹ 2,80,000
Ans – c)
Current Assets ₹ 77,000; Inventory ₹ 22,000; Prepaid Expenses ₹ 2,500 and Current Ratio is 2.2:1; then Liquid Ratio will be:
a) 3 : 1
b) 1.5 : 1
c) 1 : 1
d) None of these
Ans – b)
Which of the following will reduce the current ratio?
a) Payment of Bills payable on maturity
b) Conversion of debentures into equity shares
c) Declaration of final dividend
d) Issue of bonus shares
Ans – c)
The _______ is useful in evaluating credit and collection policies.
a) Average payment period
b) current ratio
c) average collection period
d) current asset turnover
Ans – c)
Profitability ratios help in assessing the overall efficiency with which a business is being managed.
a) True
b) False
c) Can’t say
d) Partially true
Ans – a)
Total Assets to debt ratio is a:
a) Profitability Ratio
b) Solvency Ratio
c) Activity Ratio
d) Liquidity Ratio
Ans – b)
Particulars | ₹ |
Fixed Assets | 8,00,000 |
Total Assets | 12,00,000 |
Long-term Borrowings | 6,00,000 |
Long-term Provisions | 2,00,000 |
9% Bonds | 1,00,000 |
Trade Payables | 1,00,000 |
Total Assets to Debt Ratio will be:
(a) 2.5 : 1
(b) 1.33 : 1
(c) 1.5 : 1
(d) 2.22 : 1
Ans – (c)
Which of the following will have no effect on the Debt Equity Ratio?
a) Purchase of fixed asset by taking long term loan
b) Conversion of debentures into shares
c) Issue of bonus shares
d) Sale of fixed assets at a loss
Ans – c)
The interest coverage ratio is given by:
a) Net Profit/Interest on long term borrowing
b) Long term borrowings/Interest on long term borrowings
c) Profit before interest and tax/interest on long term borrowings
d) Profit before Tax/Interest on long term borrowings
Ans – c)
The total assets to debt ratio establish a relationship between ______ and _____ .
a) total assets; total long term debts
b) total assets; total debts
c) non-current assets; total long term debts
d) None of the above
Ans – a)
______ the ratio shows the extent to which the total assets have been financed by the proprietor.
a) Proprietary ratio
b) Debt equity ratio
c) Total assets to debt ratio
d) None of the above
Ans – a)
Which of the ratios show how efficiently a company’s resources are used?
a) Profitability Ratio
b) Solvency Ratio
c) Activity Ratio
d) Liquidity Ratio
Ans – c)
To calculate the trade receivable turnover ratio __ is divided by average trade receivables.
a) Gross Revenue from Operations
b) Net Revenue from Operations
c) Net Credit Revenue from Operations
d) Net Cash Revenue from Operations
Ans – c)
A rise in the operating ratio will indicate a rise in inefficiency.
a) True
b) False
c) Can’t say
d) Partially true
Ans – b)
Which ratio indicates the speed with which amount is being paid to the creditors?
a) Trade payables turnover ratio
b) Trade receivables ratio
c) Inventory turnover ratio
d) None of the above
Ans – a)
Which ratio is complementary to each other?
a) Current and Liquid Ratio
b) Operating and Operating Profit Ratio
c) Gross and Net profit ratio
d) Trade Receivable and Trade Payable
Ans – b)
The best definition of capital employed in calculating the rate of return on investment is:
a) Current Assets + Gross Fixed Assets
b) Current Assets + Non-current Assets
c) Working capital + Gross Fixed Assets
d) Working Capital + Non-Current Assets
Ans – d)
Which of the following formulas is used to calculate working capital turnover ratio?
a) revenue from operations/current assets
b) Revenue from operations/COGS
c) Gross Sales/COGS
d) Revenue from operations/current assets current liabilities
Ans – d)
Which of the following groups of ratios primarily measure risk?
a) Liquidity, activity, and profitability
b) Liquidity, activity, and common stock
c) Liquidity, activity, and debt
d) Activity, debt, and profitability
Ans – c)
Collection of debtors will ________ .
a) Decreases current ratio
b) increases the current ratio
c) has no effect on the current ratio
d) none of the above
Ans – c)
A transaction involving a decrease in Debt-Equity ratio and an increase in Current Ratio is:
a) Issue of Debentures against the purchase of fixed assets
b) Redemption of preference shares for cash
c) Issue of shares for cash
d) Issue of debentures for cash
Ans – c)
The two basic measures of operational efficiency of a company are
a) Inventory turnover ratio and working capital turnover ratio
b) Liquid Ratio and Operating Ratio
c) Liquid Ratio and Current Ratio
d) Gross Profit Margin and Net Profit Margin
Ans – d)
What will be the current ratio of a company whose net working capital is Zero?
a) 1:1
b) 0
c) 1.5
b) Can’t say
Ans – a)
If 365 is divided by the Inventory Turnover ratio, it becomes a measure of:
a) Revenue from Operations Efficiency
b) Average Collection period
c) Average age of Inventory
d) Revenue from Operations Turnover
Ans – c)
Which of the following measures the earning available to an equity shareholder on a per share basis?
(a) Dividend Per share
(b) Earning Per Share (EPS)
(c) Net Profit per share
(d) None of these
Ans – (b)
The ______ indicates the percentage of each sales rupee remaining after the firm has paid the cost of goods sold.
a) Net profit margin
b) Gross Profit Margin
c) Operating Cost Margin
d) Earnings available to equity shareholders
Ans – b)
The _______ may indicate that the firm is experiencing stockouts and lost sales.
a) Average payment method
b) Inventory turnover ratio
c) Average Collection period
d) Quick ratio
Ans – b)
What will be the effect of the purchase of goods for cash ₹3000 on gross profit ratio?
a) It will increase
b) It will decrease
c) Either a) or b)
d) No change
Ans – b)
Total Revenue from Operations ₹ 15,00,000; Cost of Revenue from Operations ₹ 9,00,000 and Operting Expenses ₹ 2,25,000. Operating
Ratio will be:
a) 75%
b) 25%
c) 60%
d) 15%
Ans – a)
A firm has current ratio of 5 : 2. Its Current Assets are ₹ 6,50,000 and Inventories ₹ 26,000. The liquid ratio of the fimr is:
a) 2.8 : 1
b) 2.4 : 1
c) 5:3:2
d) None of these
Ans – b)
Current Assets of a concern are ₹ 7,00,000. Its current ratio is 7:2 and liquid ratio is 3:1. The value of its liquid assets is:
a) ₹4,00,000
b) ₹6,00,000
c) ₹80,000
d) None of these
Ans – b)
In a concern, Total Assets to Debt Ratio is 3:1. Its total assets are ₹ 12,00,000 and current liabilities are ₹80,000. Its
equity is of:
a) ₹ 2,40,000
b) ₹ 6,00,000
c) ₹ 7,20,000
d) None of these
Ans – c)
The higher the ratio, the more favorable it is, does not stand true for:
a) Liquidity Ratio
b) Net profit Ratio
c) Operating Ratio
d) Inventory turnover Ratio
Ans – c)
Two basic measures of liquidity are:
a) Inventory turnover and a current ratio
b) Current ratio and Quick ratio
c) Gross Profit ratio and Operating ratio
d) Current ratio and Average Collection period
Ans – b)
The sale of goods on credit for ₹67,000 will increase the gross profit ratio. Is this statement true?
a) True
b) False
c) Can’t say
d) Partially True
Ans – a)
Liquid Assets do not include:
a) Bills Receivable
b) Debtors
c) Inventory
d) Bank Balance
Ans – c)
The difference between Operating costs and Operating Expenses is:
a) Operating profit
b) Net profit
c) Cost of revenue from operations
d) None of these
Ans – c)
Which of the following is expressed as a pure ratio?
a) Inventory turnover ratio
b) quick ratio
c) Gross Profit ratio
d) None of these
Ans – b)
Which of the following ratios is expressed in times?
a) Inventory turnover ratio
b) Current ratio
c) Net profit ratio
d) None of these
Ans – a)
To assess the efficiency of inventory management in the business, we may use:
a) Operating profit ratio
b) Current ratio
c) Inventory Turnover ratio
d) Debt Equity ratio
Ans – c)
Working capital is the :
a) Cash and bank balance
b) Loans borrowed from the banks
c) Difference between current assets and current liabilities
d) Difference between current assets and fixed assets
Ans – c)
Current assets include only those assets which are expected to be realized within:
a) 3 months
b) 6 months
c) 9 years
d) 2 years
Ans – a)
Which of the following will decrease the Debt Equity Ratio?
a) Purchase of a fixed asset by taking a long term loan
b) Purchase of a fixed asset by issuing shares for consideration.
c) Sale of fixed assets (book value ₹ 10,0000) for ₹8,000.
d) Issue of debentures of ₹ 2,00,000 in the market
Ans – b)
What does a low proprietary ratio mean?
a) Adequate safety cover for lender and creditors
b) Greater risk to unsecured lenders and creditors
c) Shareholders funds are more than the total assets
d) None of these
Ans – b)
The current ratio of Vidur Pvt Ltd is 3:2. The accountant wants to maintain it at
2:1. following options are available.
i) He can repay Bills payable
ii) He can purchase goods on credit
iii) He can take short term loan
choose the correct option.
a) Only i) is correct
b) Only ii) is correct
c) Only i) and iii) are correct
d) All are correct
Ans – a)
Which of the following ratios is not a solvency ratio?
a) Debt to Equity ratio
b) Current Ratio
c) Total Assets to Debt Ratio
d) Proprietary Ratio
Ans – b)
The Liquidity ratio of concern is 1.5:1, and it purchased goods of ₹ 50,000
for cash, The ratio will:
a) increase
b) decrease
c) not change
d) may increase or decrease
Ans – b)
_______ of a business means the business is in a position to meet its short-term financial obligations as and when they become due.
a) Liquidity
b) Profitability
c) Solvency
d) All of these
Ans – a)
Which of the following transaction will decrease the Quick Ratio?
a) Debentures converted into equity shares
b) Paid rent in advance
c) Payment received from a debtor
d) All of these
Ans – b)
The interest coverage ratio is a :
a) Solvency Ratio
b) Activity Ratio
c) Profitability Ratio
d) Liquidity Ratio
Ans – a)
Current and Liquid ratios fall under the head of:
a) Solvency Ratio
b) Liquidity Ratio
c) Activity Ratio
d) Profitability Ratio
Ans – b)
Two basic measures of Long term Solvency are:
a) Inventory turnover ratio and a current ratio
b) Total asset to Debt ratio and Proprietory ratio
c) Gross Profit Ratio and Operating ratio
d) Current ratio and average collection period
Ans – b)
The Current Ratio is:
a) Liquid Assets/Current Assets
b) Fixed Assets/Current Assets
c) Current Assets/Current Liabilities
d) Liquid Assets/Current Liabilities
Ans – c)
Liquid Assets do not include:
a) Bills Receivable
b) Debtors
c) Inventory and Prepaid Expenses
d) Inventory
Ans – c)
Working Capital is the:
a) Cash and Bank Balance
b) Capital borrowed from Banks
c) Difference between current assets and current liabilities
d) Difference between current assets and Fixed Assets
Ans – c)
Working Capital is:
a) Current Assest + Non-current assets – Current liabilities
b) Capital Employed – Non-current assets
c) Fixed Assets – Current Liabilities
d) All current assets except inventory and prepaid expenses
Ans – b)
Current Assets is:
a) Working Capital + Current Liabilities
b) Quick Assets + Inventory + Prepaid Expenses
c) Total Assets – Non-current assets
d) All of the above
Ans – d)
Shareholders Funds or Equity is:
a) Total Assets – Total Debts – (Non Current Liabilities + Current
Liabilities)
b) Capital Employed – Long term debts
c) Equity and Preference Share Capital + Reserve and Surplus
d) All of the above
Ans – d)
On the basis of the following information: answer the question that follows:
Share capital ₹ 5,00,000, Reserve and surplus ₹ 1,20,000. Current Assets ₹ 1,80,000 and Non current Assets ₹ 7,20,000
The Proprietary ratio is:
a) 1.25:1
b) 0.68:1
c) 2:5
d) None of these
Ans – b)
Calculate Working Capital Turnover Ratio from the following information:
Revenue from operations ₹ 12,00,000
Current Assets ₹ 3,00,000
Total Assets ₹ 8,00,000
Non-Current Liabilities ₹ 3,00,000
Shareholders Funds ₹ 4,00,000
a) 6 times
b) 4 times
c) 2.5 times
d) None of these
Ans – a)
XYZ Ltd. earned a gross profit of ₹ 6,00,000 during the year and its gross profit ratio is 30%. Thus, its Revenue from Operations is:
a) ₹ 40,00,000
b) ₹ 20,00,000
c) ₹ 25,00,000
d) None of these
Ans – b)
Compute gross profit ratio; if revenue from operations is ₹ 3,25,000 and gross profit is 30% of the cost.
a) 23%
b) 32%
c) 27%
d) None of these
Ans – a)
From the following information, calculate Operating Ratio:
Cost of Revenue from Operations ₹ 4,00,000
Operating Expenses ₹ 55,000
Revenue from Operations ₹ 6,50,000
a) 55%
b) 70%
c) 65%
d) None of these
Ans – b)
From the following information, calculate Operating Rato:
Revenue from Operations ₹ 6,30,000
Rate of Gross Profit on Cost ₹ 40%
Selling Expenses ₹ 12,500
Administrative Expenses ₹ 10,000
a) 55%
b) 85%
c) 75%
d) None of these
Ans – c)
From the following information, Calcualte Return on Investment.
Net Profit after Interest and Tax ₹ 4,05,000
9% Debentures ₹ 15,00,000
Tax @10%
Capital Employed ₹ 3,00,000
a) 8%
b) 12%
c) 19.85%
d) 15%
Ans – c)
A company’s current ratio is 3:1 and liquid ratio is 1.8:1. If its current liabilities are ₹ 2,00,000, the value of inventory
is:
a) ₹ 2,40,000
b) ₹ 3,60,000
c) ₹ 1,20,000
d) None of these
Ans – a)
Ratio that are calculated for measuring the efficiency of operations of business based on effective utilisation of resources are known as:
(a) Liquidity Ratios
(b) Turnover Ratios
(c) Solvency Ratios
(d) Profitability Ratios
Ans – (b)
Inventory Turnover Ratio is:
(a) Average Inventory/Revenue from Operations
(b) Average Inventory/Cost of Revenue from Operations
(c) Cost of Revenue from Operations/Average Inventory
(d) G.P./Average Inventory
Ans – (c)
Opening Inventory ₹ 1,00,000; Closing Inventory ₹ 1,50,000; Purchases ₹ 6,00,000; Carriage ₹ 25,000; Wages ₹ 2,00,000. Inventory Turnover Ratios will be:
(a) 6.6 Times
(b) 7.4 Times
(c) 7 Times
(d) 6.2 Times
Ans – (d)
Revenue from Operations ₹ 8,00,000; Gross Profit Ratio 25%; Opening Inventory ₹ 1,00,000; Closing Inventory ₹ 60,000. Inventory Turnover Ratios will be:
(a) 10 Times
(b) 7.5 Times
(c) 8 Times
(d) 12.5 Times
Ans – (b)
On the basis of following data, the cost of revenue from operations by a company will be:
Opening Inventory ₹ 70,000; Closing Inventory ₹ 80,000; Inventory Turnover Ratio 6 Times.
(a) ₹ 1,50,000
(b) ₹ 90,000
(c) ₹ 4,50,000
(d) ₹ 4,80,000
Ans – (c)
Opening Inventory of a firm is ₹ 80,000. Cost of revenue from Operations is ₹ 6,00,000. Inventory Turnover Ratios is 5 Times. Its closing Inventory will be:
(a) ₹ 1,60,000
(b) ₹ 1,20,000
(c) ₹ 80,000
(d) ₹ 2,00,000
Ans – (a)
A company’s current ratio is 2.5:1 and liquid ratio is 3:2. If its current assets are ₹ 7,20,000, its inventory is:
a) ₹ 2,88,000
b) ₹ 4,80,000
c) ₹ 3,28,000
d) None of these
Ans – a)
If the average inventory is ₹ 1,00,000 and closing inventory is two times more than that in the begining, then the value the closing inventory:
a) ₹ 2,00,000
b) ₹ 1,50,000
c) ₹ 1,80,000
d) None of these
Ans – b)
Cost of revenue from operations ₹ 6,00,000; Inventory Turnover Ratio 5; Find out the value of opening inventory, if opening inventory is ₹ 8,000 less than the closing inventory.
(a) ₹ 1,12,000
(b) ₹ 1,16,000
(c) ₹ 1,28,000
(d) ₹ 1,24,000
Ans – (b)
Revenue from operations ₹ 2,00,000; Inventory Turnover Ratio 5; Gross Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is ₹ 8,000 more than the Opening Inventory.
(a) ₹ 38,000
(b) ₹ 22,000
(c) ₹ 34,000
(d) ₹ 26,000
Ans – (c)
If average inventory is ₹ 50,000 and closing inventory is ₹ 2,000 less than the opening inventory, opening and closing inventory will be:
(a) ₹ 52,000 and ₹ 50,000
(b) ₹ 50,000 and ₹ 48,000
(c) ₹ 48,000 and ₹ 46,000
(d) ₹ 51,000 and ₹ 49,000
Ans – (d)
Average Inventory ₹ 60,000; Inventory Turnover Ratio 8; Gross Profit 20% on revenue from operations; What will be Gross Profit?
(a) ₹ 1,20,000
(b) ₹ 96,000
(c) ₹ 80,000
(d) ₹ 15,000
Ans – (a)
Opening Inventory ₹ 1,00,000; Closing Inventory ₹ 1,20,000; Purchases ₹ 20,00,000; Wages ₹ 2,40,000; Carriage Inwards ₹ 1,50,000; Selling Exp. ₹ 60,000; Revenue from Operations ₹ 30,00,000. Gross Profit Ratio will be:
(a) 29%
(b) 26%
(c) 19%
(d) 21%
Ans – (d)
Cash Revenue from Operations ₹ 4,00,000; Credit Revenue from Operations ₹ 21,00,000; Revenue from Operations Return ₹ 1,00,000; Cost of revenue from operations ₹ 19,20,000. G.P. ratio will be:
(a) 4%
(b) 23.2%
(c) 80%
(d) 20%
Ans – (d)
On the basis of following data, a Company’s Gross Profit Ratio will be: Net Profit ₹ 40,000; Office Expenses ₹ 20,000; Selling Expenses ₹ 36,000; Total Revenue from Operations ₹ 6,00,000.
(a) 16%
(b) 20%
(c) 6.67%
(d) 12.5%
Ans – (a)
What will be the amount of Gross Profit, if Revenue from Operations are ₹ 6,00,000 and Gross Profit Ratio is 20% of cost?
(a) ₹ 1,50,000
(b) ₹ 1,00,000
(c) ₹ 1,20,000
(d) ₹ 5,00,000
Ans – (b)
What will be the amount of Gross Profit. If Revenue from Operations are ₹ 6,00,000 and Gross Profit Ratio 20% of Revenue from Operations?
(a) ₹ 1,50,000
(b) ₹ 1,00,000
(c) ₹ 1,20,000
(d) ₹ 5,00,000
Ans – (c)
Opening Inventory ₹ 75,000; Closing Inventory ₹ 1,05,000; Inventory Turnover Ratio 6; Gross Profit 20% on cost; What will be Gross Profit?
(a) ₹ 1,35,000
(b) ₹ 1,08,000
(c) ₹ 90,000
(d) ₹ 18,000
Ans – (b)
A company’s revenue from opeartoins is ₹ 20,00,000, cost of revenue from operations is ₹ 14,00,000, closing inventories ₹ 50,000 and indirect expenses are ₹ 2,00,000. The amount of gross profit on the basis of given information is:
a) 40%
b) 25%
c) 30%
d) 35%
Ans – c)
Revenue from Operations is ₹ 1,80,000; Rate of Gross Profit is 25% on cost. What will be the Gross Profit?
(a) ₹ 45,000
(b) ₹ 36,000
(c) ₹ 40,000
(d) ₹ 60,000
Ans – (b)
Operating Ratio is:
(a) Cost of Revenue from Operations + Selling Expenses/Net Revenue from operations
(b) Cost of Production + Operating Expenses/Net Revenue from Operations
(c) Cost of Revenue from Operations + Operating Expenses/Net Revenue from Operations
(d) Cost of Production/Net Revenue from Operations
Ans – (c)
Cost of Revenue from Operations =
(a) Revenue from Operations – Net Profit
(b) Revenue from Operations – Gross Profit
(c) Revenue from Operations – Closing Inventory
(d) Purchases – Closing Inventory
Ans – (b)
Purchases ₹ 7,20,000; Office Expenses ₹ 30,000; Selling Expenses ₹ 90,000; Opening Inventory ₹ 1,40,000; Closing Inventory ₹ 80,000 Revenue from Operations ₹ 12,00,000. Calculate Operating Ratio.
(a) 60%
(b) 75%
(c) 70%
(d) 65%
Ans – (b)
Revenue from Operations ₹ 6,00,000; Gross Profit 20%; Office Expenses ₹ 30,000; Selling Expenses ₹ 48,000. Calculate Operating Ratio.
(a) 80%
(b) 85%
(c) 96.33%
(d) 93%
Ans – (d)
The Net Revenue from Operations of Gama Ltd. is ₹ 14,00,000. Its Gross Proift is ₹ 9,00,000;
Operating Expenses are ₹ 75,000;
Commission Received is ₹ 5,000;
Profit from Sale of Fixed Asset is ₹ 10,000.
The Operating Profit Ratio of Gama Ltd. will be:
(a) 59.29%
(b) 58.92%
(c) 60%
(d) 58.93%
Ans – (a)
Gross Profit Ratio of a company was 25%. Its credit revenue from operations was ₹ 16,00,000 and its cash revenue from operations was 20% of the total revenue from operations. If the indirect expenses of the company were ₹ 50,000, its net profit ratio will be:
(a) 27.5%
(b) 20%
(c) 22.5%
(d) 25%
Ans – (c)
The two basis measures of operational efficiency of a company are:
(a) Inventory Turnover Ration and Working Capital Turnover Ratio
(b) Liquid Ration and Operating Ratio
(c) Liquid Ration and Current Ratio
(d) Gross Profit Margin and Net Profit Margin
Ans – (a)
The area of interest for a long term lender while analyzing financial statements will be:
(a) Liquidity
(b) Activity
(c) Solvency
(d) Profitability
Ans – (c)
Net Profit ₹ 1,60,000; Wages ₹ 80,000; Office Expenses ₹ 30,000; Selling Expenses ₹ 10,000; Revenue from Operations ₹ 8,00,000. Gross Profit Ratio will be:
(a) 35%
(b) 25%
(c) 15%
(d) 5%
Ans – (b)
Purchase of a fixed asset by issuing debentures will _ the debt equity ratio (2:1).
a) Increase
b) Decrease
c) No change
d) May increase or decrease
Ans – a)
If capital employed is ₹ 8,00,000, total debt is ₹ 5,00,000, current liability is ₹ 2,00,000 then the value of debt equity ratio is:
a) 2:5
b) 3:5
c) 5:8
d) None of these
Ans – b)
What will be the amount of gross profit of a firm if its average inventory is ₹ 80,000, Inventory turnover ratio is 6 times, and the Selling price is 25% above cost?
(a) ₹ 1,20,000
(b) ₹ 1,60,000
(c) ₹ 2,00,000
(d) None of the above
Ans – (a)
Opening Inventory ₹ 40,000; Purchase ₹ 4,00,000; Purchase Return ₹ 12,000, What will be Inventory turnover ratio if Closing Inventory is less than Opening Inventory by ₹ 8,000?
(a) 9 Times
(b) 10.78 Times
(c) 11 Times
(d) 8.82 Times
Ans – (c)
Particulars | ₹ |
Opening Debtors | 60,000 |
Closing Debtors 1,00,000 Less: Provision for Doubtful Debts 20,000 | 80,000 |
Total Sales | 8,40,000 |
Credit Sales | 5,60,000 |
Trade Receivables Turnover Ratio will be:
(a) 12 Times
(b) 8 Times
(c) 10.5 Times
(d) 7 Times
Ans – (d)
Total Revenue from Operations ₹ 12,00,000; Credit Revenue from Operations ₹ 9,00,000; Opening Debtors ₹ 90,000; Closing Debtors ₹ 1,10,000; Provision for Doubtful Debts ₹ 20,000. Trade Receivables Turnover Ratio will be:
(a) 10 Times
(b) 9 Times
(c) 12 Times
(d) 13.3 Times
Ans – (b)
Total Revenue from Operations ₹ 27,00,000; Credit Revenue from Operations ₹ 18,00,000; Opening Debtors ₹ 3,20,000; Closing Debtors ₹ 4,00,000; Provision for Doubtful Debts ₹ 60,000. Trade Receivables Turnover Ratio will be:
(a) 7.5 Times
(b) 9 Times
(c) 6 Times
(d) 5 Times
Ans – (d)
If Total Sales is ₹ 2,50,000 and Credit Sales is 25% of Cash Sales. The amount of Credit Sales is:
(a) ₹ 50,000
(b) ₹ 2,50,000
(c) ₹ 16,000
(d) ₹ 3,00,000
Ans – (a)
From the following particulars of Zee Ltd., the Trade Receivables Turnover Ratio of the company will be:
Particulars | ₹ |
Revenue from Operations | 12,00,000 |
Cash Revenue from Operations | 25% of Credit Revenue from Operations |
Gross Debtors | 1,90,000 |
Bills Receivables | 50,000 |
Provision for Doubtful Debts | 10,000 |
Options
(a) 3.75 times
(b) 4 times
(c) 4.17 times
(d) 8 times
Ans – (b)
Particulars | ₹ |
Revenue from Operations | 5,00,000 |
Cost of Revenue from Operations | 3,10,000 |
Office Expenses | 40,000 |
Selling Expenses | 30,000 |
Loss by Fire | 20,000 |
Operating Profit Ratio will be:
(a) 20%
(b) 30%
(c) 24%
(d) 38%
Ans – (c)
If Net Revenue from Operations of a firm are ₹ 15,00,000, Gross Profit is ₹ 9,00,000, and Operating Expenses are ₹ 75,000. The operating profit ratio will be:
a) 45%
b) 50%
c) 55%
d) 65%
Ans – c)
The current assets and current liabilities of Accounts Guru Ltd are ₹ 3,00,000 and ₹ 2,00,000, respectively. The company is
Planning to avail a bank loan. The minimum current ratio required by bank is 2:1 to consider the loan proposed. The amount of
sundry creditors to be paid to achieve the desired level of current ratio will be:
a) ₹ 1,00,000
b) ₹ 2,00,000
c) ₹ 1,50,000
d) ₹ 3,00,000
Ans – a)
A firm makes Credit Revenue from Operations ₹ 2,40,000 during the year. If the Trade Receivables Turnover Ratio is 8 times, Calculate Closing Debtors, If the Closing Debtors are more by ₹ 6,000 than the Opening Debtors:
(a) ₹ 33,000
(b) ₹ 36,000
(c) ₹ 24,000
(d) ₹ 27,000
Ans – (a)
Credit Revenue from Operations ₹ 3,00,000. Trade Receivables Turnover Ratio 5; Calculate Closing Debtors, if Closing Debtors are two times in comparison to Opening Debtors.
(a) ₹ 40,000
(b) ₹ 60,000
(c) ₹ 80,000
(d) ₹ 1,20,000
Ans – (c)
Unilever Plc (ULVR.L) said on Thursday (Feb. 9, 2023): It would continue to raise prices for its detergents, soaps and packaged food to offset rising input costs, and ease up those hikes in the second half of 2023.
which one of the following is the reason for the decision taken by Unilever Pic?
(a) To repaid the company’s Debt to Equity Ratio so that it can derive the benefits of trading on equity.
(b) To repair the company’s Trade Receivables Ratio in order to reduce the risk of bad debts.
(c) To repair the company’s gross margin as the industry has been battling with COVID-era supply chain issues and raw material expenses
(d) To repair the company’s Inventory Turnover Ratio as the cost of warehousing had increased due to accumulation of stocks.
Ans – (c)
Choose the correct statement in the context of the Trade Payables Turnover Ratio.
(a) A high ratio indicates a shorter payment period
(b) A high ratio indicates a longer payment period
(c) A low ratio indicates a longer collection period
(d) A low ratio indicates a shorter collection period
Ans – (a)
Credit Purchases ₹ 6,00,000; Trade Payables Turnover Ratio 5; Calculate Closing Creditors, if Closing Creditors are ₹ 10,000 less than Opening Creditors.
(a) ₹ 1,15,000
(b) ₹ 1,25,000
(c) ₹ 1,30,000
(d) ₹ 1,10,000
Ans – (a)
On the basis of following data, the Working Capital Turnover Ratio of a company will be:
Liquid Assets ₹ 3,70,000; Inventory ₹ 80,000; Current Liabilities ₹ 1,50,000; Cost of revenue from Operations ₹ 7,50,000.
(a) 2.5 Times
(b) 3 Times
(c) 5 Times
(d) 3.8 Times
Ans – (a)
Bhumi Ltd. has current ratio of 4 : 1 and quick ratio of 2.5:1. Assuming inventories (stock) are ₹ 22,500. The amount of total current assets will be:
a) ₹ 60,000
b) ₹ 45,000
c) ₹ 80,000
d) ₹ 54,200
Ans – a)
A firm has current ratio of 4:1 and quick ratio of 2.5:1. Assuming inventories (stock) are ₹ 22,500, Total amount of current liabilities
will be:
a) ₹ 20,000
b) ₹ 16,000
c) ₹ 15,000
d) ₹ 30,000
Ans – c)
If Jyoti Ltd. has a liquid ratio of 7:3 and its stock is ₹ 25,000 and current liabilities are ₹ 75,000. The amount of liquid
assets will be:
a) ₹ 1,75,000
b) ₹ 2,00,000
c) ₹ 2,25,000
d) ₹ 5,000
Ans – a)
If X Ltd. has a liquid ratio of 7:3 and its stock is ₹ 25,000 and current liabilities are ₹ 75,000. The amount of the current
assets will be:
a) ₹ 1,25,200
b) ₹ 54,000
c) ₹ 2,00,000
d) ₹ 65,200
Ans – c)
If PQR Ltd. has a liquid ratio of 7:3 and its stock is ₹25,000 and current liabilities are ₹ 75,000, the current ratio will
be:
a) 2.67:1
b) 2.35:1
c) 4:1
d) 2.36:1
Ans – a)
Sheetal Ltd. has a current ratio of 3:1. It its stock is ₹40,000 and total current liabilities are ₹ 75,000, the quick ratio will
be:
a) 2.7:1
b) 2.47:1
c) 4:1
d) 2.36:1
Ans – b)
Shalini Ltd. has a current ratio of 3:1. It its stock is ₹ 40,000 and total current liabilities are ₹ 75,000, the amount
of current assets of Shalini Ltd will be:
a) ₹ 75,000
b) ₹ 2,25,000
c) ₹ 2,50,000
d) ₹ 98,500
Ans – b)
Aakash Ltd has a current ratio of 3:1. It its stock is ₹ 40,000 and total current liabilities are ₹ 75,000, the amount
of liquied assets of Aakash Ltd will be:
a) ₹ 1,85,000
b) ₹ 2,25,000
c) ₹ 2,50,000
d) ₹ 98,500
Ans – a)
Current Assets of a company are ₹ 5,00,000 and its current ratio is 2.5. Thereafter, it received ₹ 2,00,000 from its debtors and made payment of ₹ 1,00,000 to its creditors. Current ratio will be:
(a) 2 : 1
(b) 5 : 1
(c) 6 : 1
(d) 4 : 1
Ans – (d)
If Current assets of a company are ₹ 5,00,000; current ratio 2.5:1 and Quick Ratio 1:1. The value of current liabilities
will be:
a) ₹ 1,20,000
b) ₹ 2,10,000
c) ₹ 2,00,000
d) ₹ 1,50,000
Ans – c)
If Current assets of a company are ₹ 5,00,000; current ratio 2.5:1 and Quick Ratio 1:1, the value of liquid assets will be:
a) ₹ 1,20,000
b) ₹ 2,10,000
c) ₹ 2,00,000
d) ₹ 1,50,000
Ans – c)
If Current assets of a company are ₹ 5,00,000; current ratio 2.5:1 and Quick Ratio 1:1, the value of inventory will be:
a) ₹ 1,20,000
b) ₹ 2,10,000
c) ₹ 3,00,000
d) ₹ 1,50,000
Ans – c)
Current liabilities of a company are ₹ 1,20,000. Its current ratio is 3.00 and liquid ratio is 0.90. The amount of Current
Asset will be:
a) ₹ 1,20,000
b) ₹ 2,10,000
c) ₹ 3,60,000
d) ₹ 1,50,000
Ans – c)
Current liabilities of a company are ₹ 1,20,000. Its current ratio is 3.00 and liquid ratio is 0.90. The amount of Liquid
Assets will be?
a) ₹ 1,20,000
b) ₹ 2,10,000
c) ₹ 3,60,000
d) ₹ 1,08,000
Ans – d)
Current liabilities of a company are ₹ 1,20,000. Its current ratio is 3.00 an liquid ratio is 0.90. The amount of Inventory
will be:
a) ₹ 1,20,000
b) ₹ 2,10,000
c) ₹ 2,52,000
d) ₹ 1,50,000
Ans – c)
Current ratio of a company is 3:1, working capital is ₹ 30,000. The amount of current assets and current liabilities is:
a) 12,000; 24,000
b) 21,000; 45,000
c) 45,000; 15,000
d) 50,000; 65,000
Ans – c)
Which of the following are included in traditional classification of ratios?
(i) Liquidity Ratios
(ii) Statement of Profit and Loss Ratios
(iii) Balance Sheet Ratios
(iv) Profitability Ratios
(v) Composite Ratios
(vi) Solvency Ratios
(a) (ii), (iii) and (v)
(b) (i), (iv) and (vi)
(c) (i), (ii) and (vi)
(d) All (i), (ii), (iii), (iv), (v), (vi)
Ans – (a)
Which one of the following is correct?
(i) A ratio is an arithmetical relationship of one number to another number
(ii) Liquid Ratio is also known as Acid Test Ratio
(iii) Ideally accepted Current Ratio is 1 : 1
(iv) Debt-Equity Ratio is the relationship between Outsider’s Funds and Shareholders’ Funds
In the context of the above statements, which of the following options in correct?
(a) All (i), (ii) (iii) and (iv) are correct
(b) Only (i), (ii) and (iv) are correct
(c) Only (ii), (iii) and (iv) are correct
(d) Only (ii) and (iv) are correct
Ans – (b)
From the following calculate Interest Coverage Ratio
Net profit after tax ₹ 12,00,000; 10% Debentures ₹ 1,00,00,000; Tax Rate 40%.
(a) 1.2 times
(b) 3 times
(c) 2 times
(d) 5 times
Ans – (b)
________ is included in current assets while preparing balance sheet as per revised Schedule III but excluded from current assets while calculating Current Ratio.
(a) Debtors
(b) Cash and Cash Equivalents
(c) Loose tools and Stores and Spares
(d) Prepaid Expenses
Ans – (c)
Debt-Equity Ratio of Dhamaka Ltd is 3 : 1. Which of the following will result in decrease in this ratio?
(a) Issue of Debentures for Cash of ₹ 2,00,000
(b) Issue of Debentures of ₹ 3,00,000 to Vendors from whom Machinery was Purchased
(c) Goods purchased on Credit of ₹ 1,00,000
(d) Issue of Equity Shares of ₹ 2,00,000
Ans – (d)
Vibgyor Ltd. has current assets worth ₹ 3,50,000 and it needs to pay off its obligations worth ₹ 2,00,000. If the firm has to make a payment of a current liability worth ₹ 50,000, What will be the current ratio:
(a) 3 : 1
(b) 0.75 : 1
(c) 1 : 1
(d) 2 : 1
Ans – (d)
Total Assets | ₹ 3,00,000 |
Non-Current Assets | ₹ 2,60,000 |
Non-Current Liabilities | ₹ 80,000 |
Shareholders’ Funds | ₹ 2,00,000 |
Current ratio calculated on the basis of above information will be:
(a) 0.5 : 1
(b) 2 : 1
(c) 1.5 : 1
(d) 1 : 1
Ans – (b)
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