Practice Activity (turnover) Ratios (1.4.3) - Ratio Analysis - ICSE 12 Accounts

Practice: Activity (Turnover) Ratios

Lesson 1.4.3Ratio Analysis

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8 questions

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6 sample questions

Question 1.
What is the formula for the Inventory Turnover Ratio?
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Remember the key components involved in the calculation.
Question 2.
Define Debtors Turnover Ratio.
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Think about its impact on cash flow.
3Question 3.
What is the primary purpose of Activity Ratios?
- To measure profitability
- To assess efficiency in asset utilization
- To evaluate liquidity
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Think about what these ratios measure in the context of a business.
4Question 4.
True or False: A high Debtors Turnover Ratio suggests a company is collecting its receivables effectively.
- True
- False
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Recall the impact of the ratio on cash flow.
Question 5.
A company has COGS of ₹600,000 and an average inventory of ₹150,000. Calculate its Inventory Turnover Ratio. What does it indicate?
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Remember, higher ratios typically imply better inventory management.
Question 6.
A retailer had annual Net Credit Sales of ₹1,200,000 and Average Trade Debtors of ₹400,000. Calculate the Debtors Turnover Ratio and discuss its implications.
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Reflect on what this means for cash flow and collection effectiveness.

4 more questions in this section. Enroll free to practise them all.