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
Current ratio of a firm is 2:1.Whatwill be the effect if Purchase of goods for cash
  • A
    No change
    Correct
  • B
    None of these
  • C
    Decrease
  • D
    Increase
2
Which ratio is the measure of financial leverage
  • A
    Total Assets to Debt Ratio
  • B
    Proprietary Ratio
  • C
    Debt equity ratio
    Correct
  • D
    Quick Ratio
3
High debt equity ratio leads to
  • A
    Greater risk
    Correct
  • B
    Less risk
  • C
    None
  • D
    Will not have any impact
4
Which of the following statement is false relating to Total Assets to Debt Ratio
  • A
    High ratio show high security to lenders
  • B
    Low ratio show risky financial position
  • C
    None of these
    Correct
  • D
    Establish relationship between total assets and total long term debt
5
Which ratio highlight the general financial position of enterprise and measures the safety margin available to creditors
  • A
    Quick Ratio
  • B
    Total Assets to Debt Ratio
  • C
    Proprietary Ratio
    Correct
  • D
    Debt equity ratio
6
Ratio which establishes the relationship between the net profit before interest and tax and interest payable on long term debt
  • A
    Interest coverage ratio
    Correct
  • B
    Net Profit Ratio
  • C
    None of these
  • D
    Debt Equity Ration
7
Objective of Interest coverage ratio
  • A
    highlight the general financial position of enterprise
  • B
    Ascertain the amount of profit available to cover the interest charge
    Correct
  • C
    measure of financial leverage
  • D
    measures the safety margin available to creditors
8
The ratio of net credit sales to average trade debtors is called
  • A
    Creditor’s turnover ratio
  • B
    Working capital turnover ratio
  • C
    Stock turnover ratio
  • D
    Debtor turnover ratio
    Correct
9
Which of the following statement is false relating to Debtor turnover ratio
  • A
    Indicates number of times debtors are turned over a year
  • B
    Low ratio implies inefficient management
  • C
    Ascertain the amount of profit available to cover the interest charge
    Correct
  • D
    Shows after how much times funds are collected
10
Debt Equity Ratio is expressed in ____________
  • A
    None of these
  • B
    Fraction
    Correct
  • C
    Percentage
  • D
    Time
11
A very high working capital ratio indicates
  • A
    Efficient utilization of working capital
  • B
    Lack of sufficient working capital
    Correct
  • C
    Not affect the business
  • D
    Shows after how much times funds
12
High Creditors turnover ratio show
  • A
    Strict term by suppliers
    Correct
  • B
    inefficient management
  • C
    liberal credit terms
  • D
    Shows after how much times funds are collected
13
While calculating cost of good sold which item should be subtracted
  • A
    Opening stock
  • B
    Closing stock
    Correct
  • C
    Direct expenses
  • D
    Purchases
14
Why operating ratio is calculated
  • A
    Shows operational efficiency of business
    Correct
  • B
    Shows interest efficiency of business
  • C
    Shows gross efficiency of business
  • D
    Shows net efficiency of business
15
Relationship between operating ratio and operating profit ratio is
  • A
    There sum is zero
  • B
    There sum is one
  • C
    There sum is hundred
    Correct
  • D
    There is no relation between them