Financial Statements

Ratios

Easy

Earning Capacity of a Company is measured by:

Working Capital Ratio

Profitability Ratio

Solvency Ratio

Liquidity Ratio

✅ Correct Option: 2

The earning capacity of a company is measured by Profitability Ratios (such as Gross Profit Ratio, Net Profit Ratio, Return on Investment, etc.) as they indicate the company's ability to generate profits from its operations.

2026: 29 May Shift 1

Match List-I with List-II

List-I (Accounting Ratio)	List-II (Objectives/ Use of Accounting Ratio)
(A) Liquidity Ratio	(I) To know the earning capacity of the business
(B) Profitability Ratio	(II) To know the ability to pay long-term obligations
(C) Solvency Ratio	(III) To know the efficiency of business operations
(D) Activity Ratio	(IV) To know the ability to pay short-term obligations

Choose the correct answer from the options given below:

2025: 30 May Shift 2

Calculate the Current Ratio from the following information:

Particulars	(Rs.)
Inventories	50,000
Trade receivables	50,000
Advance tax	4,000
Cash and cash equivalant	30,000
Trade payables	1,00,000
Short-term borrowings (bank overdraft)	4,000

2025: 13 May Shift 2

Calulate Current Ratio from the following information:

Particulars (Rs.)	Amount (in Rs)
Inventories	60,000
Trade receivables	60,000
Advance tax	4,000
Cash and cash equivalents	50,000
Trade payables	1,30,000
Bank Overdraft	4,000

2025: 13 May Shift 2

Match List-I with List-II

List-I	List-II
(A) Liquidity Ratios	(I) Debt to Capital Employed Ratio
(B) Solvency Ratios	(II) Net profit ratio
(C) Activity Ratios	(III) Current Ratio
(D) Profitability Ratios	(IV) Working capital Turnover Ratio

Choose the correct answer from the options given below:

2024

Trade Receivables Turnover Ratio and Trade Payables Turnover Ratio are categorised as:

2026: 6 June Shift 1

A trading firm's average inventory is Rs. 40,000. If the inventory turnover ratio is 6 times and the firm sells goods at a gross profit of 25% on sales, ascertain the gross profit of the firm.

Earning Capacity of a Company is measured by:

Solution

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