Practice Meaning Of Ratio (1.2) - Ratio Analysis

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8 questions

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2 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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Quiz
2 questions · about 1 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is the definition of a ratio?
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Think of it as a comparison.
Question 2.
What do liquidity ratios measure?
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Focus on short-term debts.
3Question 3.
What does a ratio represent in accounting?
- Profit or loss
- Comparison of two numbers
- Evaluation of assets
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Think of how we use fractions.
4Question 4.
True or False: Profitability ratios assess a company's ability to pay its short-term debts.
- True
- False
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Remember the category these ratios belong to.
Question 5.
A company has total assets of ₹1,000,000 and total liabilities of ₹600,000. Calculate the debt-equity ratio and interpret what it indicates.
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Remember, equity is what's left after liabilities.
Question 6.
If a company's current assets are ₹250,000, current liabilities are ₹100,000, and inventory is ₹70,000, calculate the quick ratio.
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Don’t forget to subtract inventory!

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