Practice Short Answer Questions (1.8.2) - Ratio Analysis

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8 questions

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3 cards from this section. Quick, good the night before a test.
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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 current ratio formula?
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Think about measuring short-term financial health.
Question 2.
State one example of a profitability ratio.
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Related to a company's sales and profits.
3Question 3.
What does a high liquidity ratio indicate?
- Higher debt
- Better short-term financial health
- Poor management
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Consider which option relates to financial obligations.
4Question 4.
Is the Quick Ratio the same as Current Ratio?
- True
- False
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Think about the differences in their calculations.
Question 5.
A company has current assets of ₹2,00,000, inventory of ₹50,000, and current liabilities of ₹1,00,000. Calculate both the Current Ratio and Quick Ratio. Discuss the implications of your results.
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Use the formulas carefully to derive the two ratios.
Question 6.
Assess a hypothetical company with a Debt-Equity Ratio of 2:1. If equity is ₹1,00,000, calculate the total debt. Interpret the financial risks involved with high leverage.
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Remember the relationship of debt to equity in the ratio.

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