Tools Of Financial Analysis Accounting Ratios CBSE Questions & Answers

Tools Of Financial Analysis Accounting Ratios

This is Accountancy Class 12 Tools of Financial Analysis Accounting Ratios CBSE Questions & Answers. There are 15 questions in this test with each question having around four answer choices.

Questions & Answers

1
The following are the Profitability ratio except
  • A
    working capital ratio
    Correct
  • B
    Net profit ratio
  • C
    Gross profit ratio
  • D
    Operating profit ratio
2
Long term funds employed in the business are also known as __________
  • A
    Investments
  • B
    Long term borrowings
  • C
    Share capital
  • D
    Capital employed
    Correct
3
Return on investment ratio is calculated by
  • A
    \(\frac{{\Pr ofit{\text{ }}before{\text{ }}Interest,Tax{\text{ }}and{\text{ }}Dividend}}{{Capitalemployed}}{\text{ }} \times {\text{ }}100\)
    Correct
  • B
    \(\frac{{\Pr ofit{\text{ }}before{\text{ }}Interest}}{{Capitalemployed}}{\text{ }} \times {\text{ }}100\)
  • C
    \(\frac{{Gross{\text{ }}\Pr ofit{\text{ }}}}{{Capitalemployed}}{\text{ }} \times {\text{ }}100\)
  • D
    \(\frac{{\Pr ofit{\text{ }}before{\text{ }}Interest,Tax{\text{ }}}}{{Capitalemployed}}{\text{ }} \times {\text{ }}100\)
4
Which ratio is used to assess a business ability to generate earning as compared to expenses over a specified time period
  • A
    Activity ratio
  • B
    Solvency ratio
  • C
    Profitability ratio
    Correct
  • D
    Liquidity ratio
5
Liquidity ratio is the relationship between ____ assets and ____liabilities
  • A
    Fixed ,non current
  • B
    Current , Current
  • C
    Quick , current
    Correct
  • D
    Quick , non current
6
Ratio which shows how much of each sales shows up as net income after all expenses are paid
  • A
    Gross profit ratio
  • B
    Operating ratio
  • C
    Operating profit ratio
  • D
    Net profit ratio
    Correct
7
ratio which convey an enterprise’s ability to meet long term obligation’s
  • A
    Liquidity ratio
  • B
    Activity ratio
  • C
    Profitability ratio
  • D
    Solvency ratio
    Correct
8
While calculating capital employed what should be subtracted
  • A
    Share capital
  • B
    Reserves and surplus
  • C
    Long term loans
  • D
    Fictitious assets
    Correct
9
Higher capital employed ratio indicated
  • A
    Ability to pay interest
  • B
    Firm ability to use resource efficiently to generate income
    Correct
  • C
    Ability to dividend
  • D
    Ability to pay tax
10
Gross profit ratio shows
  • A
    All of these
    Correct
  • B
    Relationship of gross profit to net sales
  • C
    How a company controls the cost of its inventory
  • D
    How a company controls the cost of manufacturing of its products
11
Which of the following is concerned with the sales or turnover?
  • A
    Liquidity Ratio
  • B
    Activity Ratios
    Correct
  • C
    Solvency Ratio
  • D
    Profitability Ratio
12
Read the following statements (a) Provides common base for comparison irrespective of the size of individual item. (b) It presents the change in various items in relation is net sales, total assets or total liabilities. (c) It establish the trend in various items of financial statements. The above statements shows the importance of
  • A
    Ratio Analysis
  • B
    Trend Analysis
  • C
    Comparative statements
  • D
    Common Size statements
    Correct
13
low Current Ratio indicates
  • A
    Business can meet short term liability
  • B
    Business cannot meet long term liability
  • C
    Business can meet long term liability
  • D
    Business can not meet short term liability
    Correct
14
X Ltd has a debt Equity Ratio at 3:1. According to the Management, it should be maintained at 1;1. What can be done in the situation
  • A
    Both of these
    Correct
  • B
    None of these
  • C
    To reduce the debt
  • D
    To increase the Equity
15
Assuming that the Debt equity ratio is 1:2, if equity shares are issued for cash what will be the effect on ratio
  • A
    Increase
  • B
    No change
  • C
    None of these
  • D
    Decrease
    Correct