# Ratio Analysis - Finance (MCQ) Questions and answers

1)   Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Cash sales is 25% of credit sales and excess of closing debtors over opening debtors is Rs 20,000.

a. 4 times
b. 2 times
c. 6 times
d. 8 times
 Answer  Explanation ANSWER: 4 times Explanation: No explanation is available for this question!

2)   The relationship between two financial variables can be expressed in:

a. Pure ratio
b. Percentage
c. Rate or time
d. Either of the above
 Answer  Explanation ANSWER: Either of the above Explanation: No explanation is available for this question!

3)   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
 Answer  Explanation ANSWER: Current assets – stock - Prepaid expenses Explanation: No explanation is available for this question!

4)   While calculating Gross Profit, if net profit is given,

a. It can be converted into gross profit by adding interest to it
b. It can be converted into Gross profit by adding indirect expenses to it
c. Both a and b
d. None of the above
 Answer  Explanation ANSWER: It can be converted into gross profit by adding interest to it Explanation: No explanation is available for this question!

5)   If sales is Rs 10,00,000, sales returns is Rs 50,000, Profit Before Tax is Rs 2,00,000, Income tax is 40%, Net profit ratio is

a. 12.63%
b. 20%
c. 10%
d. 50%
 Answer  Explanation ANSWER: 12.63% Explanation: No explanation is available for this question!

6)   Higher the ratio, the more favorable it is, doesn’t stand true for

a. Operating ratio
b. Liquidity ratio
c. Net profit ratio
d. Stock turnover ratio
 Answer  Explanation ANSWER: Operating ratio Explanation: No explanation is available for this question!

7)   Given Sales is 1,20,000 and Gross Profit is 30,000, the gross profit ratio is

a. 24%
b. 25%
c. 40%
d. 44%
 Answer  Explanation ANSWER: 25% Explanation: No explanation is available for this question!

8)   If selling price is fixed 25% above the cost, the Gross Profit ratio is

a. 13%
b. 28%
c. 26%
d. 20%
 Answer  Explanation ANSWER: 20% Explanation: No explanation is available for this question!

9)   Overall Profitability ratios are based on

a. Investments
b. Sales
c. Both a and b
d. None of the above
 Answer  Explanation ANSWER: Investments Explanation: No explanation is available for this question!

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

a. Yes
b. No

 Answer  Explanation ANSWER: No Explanation: No explanation is available for this question!

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