Ratio Analysis - Liquidity Ratios - MCQs with answers

Ratio Analysis - Liquidity Ratios - MCQs with answers


1. Which ratio is considered as safe margin of solvency?

a) Liquid ratio
b) Quick ratio
c) Current ratio
d) None of the above

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ANSWER: c) Current ratio



2. The ideal level of current ratio is

a) 4:2
b) 2:1
c) Both a and b
d) None of the above

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ANSWER: c) Both a and b



3. Current ratio is stated as a crude ratio because

a) It measures only the quantity of current assets
b) It measures only the quality of current assets
c) Both a and b
d) Offerings dimension

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ANSWER: a) It measures only the quantity of current assets



4. Liquid ratio is also known as

a) Quick ratio
b) Acid test ratio
c) Working capital ratio
d) Stock turnover ratio

a) A and B
b) A and C
c) B and C
d) C and D

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ANSWER: a) A and B



5. Stock is considered as a liquid asset as anytime it can be converted into cash immediately.

a) Yes
b) No

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ANSWER: b) No



6. The ideal level of liquid ratio is

a) 3:3
b) 4:4
c) 5:5
d) All of the above

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ANSWER: a) 3:3



7. Debt-equity ratio is a sub-part of

a) Short-term solvency ratio
b) Long-term solvency ratio
c) Debtors turnover ratio
d) None of the above

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ANSWER: b) Long-term solvency ratio



8. Liquid assets is determined by

a) Current assets-stock-Prepaid expenses
b) Current assets +stock+ prepaid expenses
c) Current assets +Prepaid expenses
d) None of the above

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ANSWER: a) Current assets-stock-Prepaid expenses



9. Which of the following is not included in current assets?

a) Debtors
b) Stock
c) Cash at bank
d) Cash in hand

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ANSWER: b) Stock



10. Higher the ratio, the more favorable it is, doesn’t stands true for

a) Operating ratio
b) Liquidity ratio
c) Net profit ratio
d) Stock turnover ratio

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ANSWER: a) Operating ratio



11. The most precise test of liquidity is

a) Quick ratio
b) Current ratio
c) Absolute Liquid ratio
d) None of the above

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ANSWER: c) Absolute Liquid ratio



12. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.

a) Rs 54,000
b) Rs 60,000
c) Rs 1, 62,000
d) None of the above

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ANSWER: a) Rs 54,000



13. Collection of debtors

a) Decreases current ratio
b) Increases current ratio
c) Has no effect on current ratio
d) None of the above

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ANSWER: a) Decreases current ratio


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    Discussion

  • RE: Ratio Analysis - Liquidity Ratios - MCQs with answers -anjali mehta (08/26/16)
  • in question no. 13 it is stated that collection from debtors decreases the current ratio... where as it make no effect on ratio as the effect is neutralize by increasing in cash on one head and decreasing the same amt. from debtors

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